Fact suppression ground for risk claim denial: Consumer forum

A renewed insurance policy means a new contract between the insurance company and the insured, ruled the National Consumer Disputes Redressal Commission. The commission ruled in favour of Life Insurance Corporation (LIC) of India and rejected the claim of a deceased insured’s wife.

A two-member bench of president Ashok Bhan and member Vinita Rai was hearing an appeal filed by LIC against the order of State Consumer Disputes Redressal Commission, Himachal Pradesh, which had directed it to clear the claim of Shakuntala Devi.

According to LIC’s appeal, her husband, Babu Ram, had taken out an insurance policy for Rs50,000 from March 26, 1999. Babu Ram paid the premium amount regularly to the authorised agent, but the latter failed to deposit the same with LIC and hence, the deceased was termed a defaulter. After his death on November 26, 2001, his wife’s claim was repudiated. 

The wife moved the District Forum on grounds of deficiency in service and prayed for being given the claim of Rs50,000 along with other bonuses as admissible, and compensation of Rs50,000. 

However, LIC argued that after the policy lapsed, it was revived in November 2001. As Babu Ram had revived the policy after his hospitalisation and suppressed the fact that he was suffering from tuberculosis, LIC repudiated the claim.

The district consumer forum directed the LIC to pay Rs50,000 along with interest at the rate of 9% from the date of filing the complaint till the date of realisation and Rs1,000 as litigation cost due to the fact that there was nothing on record to prove that his disease was incurable.

This order was challenged by LIC, stating that there was adequate evidence that the deceased had deliberately concealed facts regarding his health. Agreeing with LIC, the National Commission repudiated the wife’s claim.