Dismissing an appeal filed by the Life Insurance Corporation of India (LIC), the State Consumer Disputes Redressal Commission, Chandigarh, has upheld an order of the District Consumer Disputes Redressal Commission, directing the insurer to pay an additional ₹1.87 lakh to the heirs of a minor policyholder who died after suffering an electric shock from an exposed street-light wire.
The commission also upheld the direction to pay 9% annual interest on the amount from February 7, 2023, until its realisation, besides ₹20,000 towards compensation and litigation expenses.
The policyholder, Mandeep Singh, who was a minor when the LIC policy was taken, died on October 12, 2020. As there was no nomination under the policy, LIC asked the family to obtain a succession certificate. A civil court subsequently issued a certificate covering ₹2.41 lakh, comprising ₹1.87 lakh as the basic death sum assured and ₹54,000 as loyalty addition. LIC paid the amount to Raj Kumari on February 7, 2023.
The family, however, claimed that Mandeep’s accidental death also entitled them to the Double Accident Benefit (DAB), amounting to an additional ₹1.87 lakh. The insurer rejected the claim, contending that since the policyholder was a minor when the policy was taken, he was required to opt afresh for DAB after attaining majority and pay an additional premium. According to LIC, no such option was exercised and no additional premium was paid.
Subsequently, the matter reached the District Consumer Disputes Redressal Commission that ruled in the favour of the family.
{{/usCountry}}Subsequently, the matter reached the District Consumer Disputes Redressal Commission that ruled in the favour of the family.
{{/usCountry}}The consumer commission rejected LIC’s contention, observing that the insurer had failed to produce any specific policy clause or documentary evidence establishing that such a fresh option and additional premium were mandatory after the policyholder attained majority.
Challenging the order, LIC argued before the commission that a consumer forum could not rewrite the terms of an insurance contract. It also relied on Section 64VB of the Insurance Act, 1938, to contend that an insurer could not assume additional risk without receiving the requisite premium.
The commission, however, found no merit in the appeal. It held that if LIC sought to deny a contractual benefit on the basis of a particular condition, it was incumbent upon the insurer to establish that condition through the actual terms of the policy.
It further held that LIC could not rely merely on internal administrative practices or an agent’s manual to establish a condition that had not been shown to form part of the contractual terms.
The commission also rejected LIC’s argument regarding non-payment of the additional premium, observing that the insurer first had to establish that such payment was a contractual prerequisite for the DAB. It noted that the accidental nature of Mandeep’s death was not disputed and LIC had not established any policy exclusion applicable to the incident.
It further clarified that the succession certificate, on the basis of which ₹2.41 lakh had been paid, did not determine the entire amount payable under the insurance policy and did not bar the family from claiming the additional accident benefit.