Lapse Of Policy Due To Insurance Co's Error, Jodhpur District Commission Holds Future General Insurance Solutions Liable

Brief Facts:

Mrs. Krishna Arora obtained an insurance policy from Future General Total Insurance Solutions (“Insurance Company”). The Complainant issued a cheque of Rs. 10,100/- to the insurance company which was handed over to the Axis Bank branch of the insurance company. However, after four to five months in the first week of July 2018, the Complainant was informed by the insurance company that the policy had lapsed due to non-deposit of the premium amount. The Complainant filed complaints through toll-free numbers and WhatsApp but received only a message stating that the cheque had been dishonoured. The Complainant made several communications with Axis Bank and the insurance company but didn't receive any satisfactory response. Feeling aggrieved, the Complainant approached the District Consumer Disputes Redressal Commission (II), Jodhpur, Rajasthan (“District Commission”) and filed a consumer complaint against Axis Bank and the insurance company.

In response, Axis Bank asserted that the main dispute concerned the Complainant and the insurance company, and the bank was not involved in the dispute. The insurance company contended that the Complainant issued a cheque on 09.03.2018, but it was not cleared, leading to the lapse of the insurance policy. It stated that the policy was subsequently renewed on 14.08.2018, and it was in force. It argued that the Complainant was aware of the dishonour of the cheque from the beginning.

Observations by the District Commission:

The District Commission noted that the Complainant made a payment of Rs. 10,000/- towards the insurance premium to the insurance company, and a cheque of Rs. 100/- was issued, which was initially accepted, and a receipt was issued by the insurance company. However, after four to five months, it was noted that the cheque was dishonoured.

Despite the Complainant's demand for return memos regarding the dishonoured cheque, the District Commission held the insurance company failed to provide the necessary documentation. The District Commission noted that the Complainant presented her Bank of Baroda account statement, demonstrating a continuous deposit of more than two lakh rupees during the said period. Further, it held that the insurance company failed to produce the dishonoured original check and return memo as evidence. The Complainant was even compelled to renew the said policy after presenting a 'Penalty and Health Declaration' form.

The District Commission concluded that the insurance company committed an error or negligence by not presenting the cheque in the bank, thereby, resulting in the lapse of the Complainant's insurance policy. Therefore, it held the insurance company liable for deficiency in service.

Resultantly, the District Commission directed the insurance company to refund Rs. 494/- (excess amount collected during renewal) to the Complainant along with Rs. 10,000/- compensation and Rs. 5,000/- litigation costs.