The National Consumer Disputes Redressal Commission, guided by AVM J. Rajendra, has emphasized the importance of strict adherence to insurance contract terms, allowing no deviations.
Case Background:
A policyholder bought a LIC Jivan Anand With Profits (With Accident Benefit) policy from an insurance company, with a coverage of Rs.2,00,00. After completing all necessary paperwork and passing a medical examination, the policy was issued. Tragically, the policyholder was involved in an accident that led to 100% permanent disability. He filed a claim for the assured amount but was denied by the insurer on the grounds of undisclosed pre-existing disease. The policyholder took the matter to the District Forum, which ruled in his favor. The insurer appealed to the State Commission, but the appeal was rejected. Therefore, the issue was escalated to the National Commission.
Insurer’s Arguments:
The insurer contended that the policyholder did not disclose a pre-existing disease while applying for the policy, which was against the policy’s terms and conditions. Therefore, they argued that the claim denial was justified.
Commission’s Observations:
The Commission noted that the District Forum had thoroughly examined the evidence and arguments before issuing its order. Similarly, the State Commission found no valid reasons to overrule the District Forum’s decision. This was primarily due to lack of substantial evidence supporting the insurer’s claim denial, and no proof of any pre-existing condition in the policyholder as per the policy’s exclusion clause. However, there was a dispute over the claim amount of Rs. 7,02,000, which exceeded the policy’s sum assured of Rs. 2,00,000, including any accrued bonus. The Commission scrutinized the policy details and found that the maximum sum assured was indeed Rs. 2,00,000, as per the policy’s terms and conditions. The policyholder’s claim for additional benefits of Rs. 5,00,000 lacked reference to the relevant provision in the policy terms. The Commission stressed the need to strictly follow the policy’s terms and conditions. It cited cases like United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal (2004) and Suraj Mal Ram Niwas Oil Mills Pvt. Ltd. v. United India Insurance Co. Ltd. (2010), where the Supreme Court emphasized that the words in an insurance contract must be given utmost importance, with no room for alterations unless ambiguity exists. The insurance company’s liability is strictly determined by the contract terms, and any deviation from these terms is not allowed.
In conclusion, the Commission partially accepted the Revision Petition and instructed the insurer to pay the sum assured of Rs. 2,00,000, plus any accrued bonus, with simple interest at a rate of 9% per annum.
Case Title: Zonal Manager, Life Insurance Corporationof India & Anr Vs. Sunil Kumar
Case Number: R.P. No. 1838/2019
