The District Consumer Disputes Redressal Commission-II in Chandigarh has delivered a significant verdict, directing an insurance company to pay an additional sum of Rs 1,87,500 along with interest to a grieving couple. The order comes as a relief to the parents whose son died due to an electric shock from a faulty streetlight, after the insurer initially refused to pay the accidental death benefit under his policy.
The Tragic Incident and Initial Claim
The case pertains to residents of Sector 56, Chandigarh, Raj Kumari and Mahendra Singh. Their son, Mandeep Singh, was insured under a life insurance policy purchased when he was a minor. The policy terms included a provision for double the sum assured in case of an accidental death.
Tragedy struck on October 12, 2020, when Mandeep Singh received a fatal electric shock from an exposed wire of a streetlight. He was rushed to the Post Graduate Institute of Medical Education and Research (PGI) in Chandigarh but succumbed to his injuries. Following the death, his parents lodged a claim with the insurance company.
Since there was no nomination recorded in the policy documents, the insurer advised the parents to obtain a succession certificate from a civil court. The civil court granted this certificate on October 28, 2022, for an amount of Rs 2,41,500 in favour of Raj Kumari, which the company subsequently paid.
The Dispute Over Accidental Death Benefit
However, the conflict arose when the insurance firm declined to disburse the additional accidental death benefit of Rs 1,87,500. The company's defense rested on the argument that since Mandeep Singh had attained majority before his death, he had not explicitly opted to continue the accident benefit rider, nor had he filed a nomination in favour of his parents.
The insurer contended that this rendered the parents ineligible for the extra payout. This refusal prompted the aggrieved parents to approach the consumer commission, alleging deficiency in service and unfair trade practice.
Commission's Firm Rejection of Insurer's Defense
The consumer commission bench firmly rejected the insurance company's arguments. In its detailed order, the commission pointed out that the insurer failed to specify any clause in the policy document that mandated a fresh option for the accident benefit upon the insured attaining majority.
Furthermore, the order noted that even if such a clause existed, the company did not provide any evidence to prove that the insured or his legal heirs were ever informed about this requirement after he became an adult. The bench emphasized a crucial principle, stating: "Insurance companies should not reject claims based on minor technicalities, especially when the insured has acted in good faith."
The commission also referenced the civil court's succession certificate order, which had explicitly clarified that its findings would not impact the complainants' rights concerning the actual sum payable under the insurance policy.
The Final Directive and Compensation
Holding the insurer liable for unfair practice, the commission issued a clear directive. The insurance company must pay the withheld amount of Rs 1,87,500 with interest at the rate of 9% per annum from February 7, 2023, until the full payment is realized.
In addition to the principal and interest, the commission also ordered the firm to pay Rs 20,000 as compensation for the mental agony and litigation costs incurred by the elderly couple. This ruling underscores the consumer forums' stance against insurers denying legitimate claims on procedural grounds, particularly in tragic circumstances like accidental death.
