Haryana State Commission Holds LIC Liable For Wrongful Repudiation Of Valid Life Insurance Claims
The State Consumer Disputes Redressal Commission, Haryana bench of Shri Naresh Katyal (Judicial Member) and Shri S.C. Kaushik (Member) held 'Life Insurance Corporation of India (LIC)' liable for deficiency in service for failure to settle a valid life insurance claim by citing lack of the deceased policy holder's histopathology report. It was held that LIC could have obtained that...
The State Consumer Disputes Redressal Commission, Haryana bench of Shri Naresh Katyal (Judicial Member) and Shri S.C. Kaushik (Member) held 'Life Insurance Corporation of India (LIC)' liable for deficiency in service for failure to settle a valid life insurance claim by citing lack of the deceased policy holder's histopathology report. It was held that LIC could have obtained that report independently from the designated medical institute, instead of waiting for the Complainant to furnish it.
Brief Facts:
The Complainant's brother obtained two life insurance policies from the Life Insurance Corporation of India (“LIC”). The Complainant was named as the nominee. During the subsistence of the policy, the Complainant's brother suffered a heart attack and died. His postmortem was conducted at Civil Hospital, Panipat but the report for the cause of death was yet to be released by PGIMS, Rohtak. However, the aforementioned report remained pending, and the police never received it. The Complainant submitted the claims with LIC but received no response. After two years of delay in addressing the claims, the Complainant sent a legal notice to LIC. However, LIC failed to send a reply or settle the claims.
Feeling aggrieved, the Complainant filed a consumer complaint in the District Consumer Disputes Redressal Commission, Hisar, Haryana (“District Commission”). In response, LIC contended that the complaint was false and frivolous. LIC further submitted that the claim was liable to be dismissed as per the terms since the death occurred within a year of the policy's start. Additionally, there was a discrepancy in the policyholder's identity, as he was known by another name as well. LIC also did not receive the histopathology report despite multiple requests.
The District Commission partly allowed the complaint and directed LIC to pay Rs. 8 Lakh for both policies, along with Rs. 10,000/- as compensation and legal costs. However, the District Commission did not award any interest on the amount of Rs. 8 Lakh to be paid by LIC. Dissatisfied by the lack of imposition of interest, the Complainant filed an appeal before the State Consumer Disputes Redressal Commission, Haryana (“State Commission”).
Observations of the State Commission:
The State Commission observed the Complainant only appealed the order because the District Commission did not grant interest. It was held that since the District Commission accepted the complaint, it should have awarded an interest on the insurance amount as well. Further, it was held that LIC could have obtained the histopathology Report from PGIMS, Rohtak independently instead of waiting for the Complainant. Therefore, it was held that LIC's inaction entitled the Complainant to the interest amount.
The State Commission also dismissed LIC's argument that the complaint was time-barred. It was held that there was a recurring cause of action due to its failure to settle the claim amount. It was also observed that the District Commission failed to provide any reason for not granting the interest on Rs. 8 Lakh. Therefore, the appeal was allowed, and the District Commission's order was modified by awarding 6% interest per annum on Rs. 8 Lakh, which was awarded originally to the Complainant.
Case Title: Karamvir vs Life Insurance Corporation of India and Anr.
Case No.: First Appeal No. 1044 of 2019
Advocate for the Original Complainant/Appellant: Mr C.R. Narwal
Advocate for the Opposite Party: Mr Rohit Goswami
Date of Pronouncement: 08.10.2024