Failure To Prove Chronic Disease As Cause Of Death, Chandigarh District Commission Holds DHFL Pramerica Life Insurance Liable For Wrongful Repudiation

Brief Facts:

Mrs. Jaswinder Kaur's (“Complainant”) husband acquired a tractor for livelihood which was financed through a loan of Rs. 2,82,573/- from IndusInd Bank (“Bank”). To secure the loan, her husband applied for insurance from DHFL Pramerica Life Insurance Co. Ltd. (“Insurance Company”), with a premium of Rs. 1760.54/-. The loan period was from 26.8.2019 to 25.8.2021, with a coverage sum assured of Rs. 2,82,573/-. Tragically, her husband passed away on 1.2.2020 due to a sudden heart attack. Despite the bank informing the Complainant that they have pursued the death claim, the insurance company did not process the insurance claim. A year after the husband's death, the bank demanded payment of the outstanding loan amount of Rs. 2,66,000/- from the Complainant, despite her husband having paid Rs. 87,486/- in EMIs. The Complainant received a notice from the bank stating that the loan contract had been terminated. The bank informed the Complainant that the insurance claim made by the Complainant has been repudiated. The Complainant wasn't informed about the repudiation of the insurance claim by the insurance company. The Complainant made several communications to the insurance company and the bank but didn't receive a satisfactory response. Thereafter, the Complainant approached the District Consumer Disputes Redressal Commission-I, U.T. Chandigarh (“District Commission”) and filed a consumer complaint against the insurance company and the bank.

In response, the insurance company admitted the case's facts but justified repudiating the claim. It alleged that the Complainant's husband concealed his chronic kidney disease, hypertension, and diabetic mellitus type-2 at the time of policy issuance. The insurance company stated that the cancellation of the existing disease was against the insurance policy. Therefore, it contended that repudiation of the claim was rightful and, therefore, prayed for dismissal of the complaint.

On the other hand, the bank denied responsibility for insurance claim settlement, asserting it only provides financial assistance. It argued that the Complainant received satisfactory service during the loan process and repayments. It contended that there was no deficiency on its part.

Observations by the Commission:

Examining the policy's terms and conditions, the District Commission noted that, under Plan A, subclause (a), the coverage in force was payable to the claimant if an insured member died during the policy's coverage period. The District Commission noted that, in this case, the Complainant died due to a heart attack, not a chronic kidney disease. Further, the District Commission held that the onus was on the insurance company to prove that the chronic disease was the main cause of the heart attack, which in this case the insurance company failed to do.

Therefore, the District Commission held the insurance company liable for deficiency in service. Consequently, the District Commission directed the insurance company to pay Rs. 2,66,986/- to the Complainant with interest @9% P.A. from the date of claim repudiation (29.6.2020). Further, it was also directed to pay a compensation of Rs. 20,000/- as compensation for mental agony and Rs. 10,000/- as litigation costs incurred by the Complainant. The District Commission dismissed the complaint against the bank.

Case Title: Jaswinder Kaur vs DHFL Pramerica Life Insurance Co. Ltd.

Case No.: CC/604/2021

Advocate for the Complainant: Nirmal Singh Jagdeva

Advocate for the Respondent: Alankrit Bhardwaj

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