Insurance Policies Must Be Read Holistically: NCDRC Holds LIC Liable For Deficiency In Service
Ayushi Rani
18 Dec 2024 12:45 PM IST
The National Consumer Disputes Redressal Commission, presided by Justice A.P. Sahi and Dr. Inder Jit Singh held that insurance policies should be read inclusively to meet the reasonable expectations of the insured.
Brief Facts of the Case
The complainant's deceased son had a life insurance policy from Life Insurance Corporation/insurer. It was a money-back policy for 20 years with a sum assured of ₹8,00,000 on death. The insured died of a heart attack, making the complainant a nominee The complainant filed a claim for the insured amount, but the insurer did not respond. The complainant then approached the District Forum, which allowed the complaint. It directed the insurer to pay a sum of Rs. 8,00,000 along with interest. Aggrieved, the insurer appealed before the State Commission of Chandigarh. The State Commission dismissed the appeal, leading the insurer to file a revision petition before the National Commission.
Contentions of the Insurer
The insurer argued that the order is illegal and against the evidence. It stated that the premium was not paid, and the policy had lapsed before the policyholder's death, so no amount was payable. The Fora erred in extending the grace period due to late ECS presentation, which does not change policy terms. It was argued that the policyholder defaulted within the grace period; hence, the policy lapsed. It was contended that the State Commission erred when it treated the policy to be in existence without payment of the premium.
Observations by the National Commission
The National Commission observed that T both the Fora below gave concurrent findings against the insurance company. After examining the insurance policy clauses, it concluded that the grace period began on 21.01.2015 and ended on 06.02.2015, not 24.01.2015 as claimed by the insurance company. The Commission relied on Canara Bank v. United India Insurance Co. Ltd. & Ors. (2020) 3 SCC 455, which held that insurance policies must be interpreted holistically to meet the reasonable expectations of the insured and beneficiaries. The Commission further held that the coverage clauses should be read broadly and exclusions, narrowly. The Commission found the State Commission's order well-reasoned, with no illegality or jurisdictional error. The order was upheld, and the revision petition was dismissed.
Case Title: Life Insurance Corporation of India Vs. Satwinder Kaur
Case Number: R.P. No. 95/2022
