Bihar State Commission Holds National Insurance Co. Liable For Wrongful Repudiation Of Accidental Claim Despite Receiving Documents

Brief Facts:

The Complainant's deceased husband subscribed to a 'Janta Personal Accident Insurance Policy for Rs. 5,00,000/- from Golden Multi Service Club Limited (“Facilitator”), issued by National Insurance Company Ltd. (“Insurance Company”). The Complainant, being the wife, was made the nominee of the said policy. During the subsistence of the policy, the deceased husband underwent treatment at Patna Medical College Hospital for his head injury. During the treatment, he passed away.

Subsequently, the Complainant submitted a claim with all the relevant documents before the Insurance Company. Despite several requests, the Insurance Company failed to pay the insured money. Feeling aggrieved, the Complainant filed a consumer complaint against the Insurance Company and the Facilitator, before the District Consumer Disputes Redressal Commission, Saran, Bihar (“District Commission”).

The Facilitator argued that it had no role in the settlement of the claim. It merely acted as a facilitator for the subscription of the policy and could not be held liable for any deficiency. The Insurance Company argued that only the courts in Kolkata had the jurisdiction to entertain any claims against it. The District Commission allowed the complaint and directed the Insurance Company to pay Rs. 5,00,000/- along with Rs, 50,000/- for mental agony to the Complainant. The interest rate on the insurance amount was kept to be 6% per annum from the date of the impugned order.

Dissatisfied by the order of the District Commission, the Complainant filed an appeal for enhancement of interest in the State Consumer Disputes Redressal Commission, Bihar (“State Commission”).

Observations of the State Commission:

The State Commission observed that the existence of a valid insurance policy and the demise of the insured was duly recognized by the Insurance Company. Additionally, the actions taken by the Complainant concerning the claim for the sum assured from her deceased husband's insurance policy were found to be appropriate. Despite all the documentation being provided to the Insurance Company, the claim remained unsettled. There was a glaring absence of a clear explanation on record regarding this matter. Consequently, the State Commission found the Insurance Company liable for deficiency in service.

Furthermore, the State Commission observed that the District Commission overlooked the aforementioned issue and simply awarded the disbursement of the insurance amount along with 6% interest from the 'date of the impugned order'. The interest rate and the applicable date were found to be insufficient.

In light of these considerations, the State Commission decided to modify the order issued by the District Commission. The Insurance Company was directed to pay Rs. 5,00,000/- along with an additional Rs. 50,000/- for physical and mental harassment and economic loss, with interest at 7% per annum from the 'date of filing the complaint'. The appeal against the Facilitator was dismissed as its liability was found to be limited.

Case Title: Meena Devi vs The Senior Divisional Manager, National Insurance Co. Ltd. and Others

Case No.: First Appeal No. A/137/2022