North-East Delhi Commission Holds Universal Sompo General Insurance Co. Liable For Wrongful Repudiation Of Death Claim

Brief Facts:

The Complainant's husband borrowed a home loan of Rs. 17,00,000/- from Indian Overseas Bank, with a monthly EMI of Rs. 20,806/- for 120 months. The Bank required that the loan be insured with the Universal Sompo General Insurance Co. Ltd. (“Insurance Company”), and the Complainant's husband agreed. The insurance policy covered major illness and death, and all formalities were completed between the husband and the Insurance Company. After paying seven instalments totalling Rs. 99,214/-, the husband suffered a brain stroke while working in Maharashtra. He was hospitalized for 23 days and underwent brain surgery. On 02.07.2020, he had a paralysis attack which worsened his condition. At the Complainant's request, he was referred to S.G.P.G.I., Lucknow, but during the transfer he collapsed from a brain stroke and was declared dead at the District Hospital.

Following her husband's death, the Complainant stopped paying the EMI, believing the loan was covered under the insurance policy for all risks. A relative informed the Insurance Company about the husband's death via email and personal visit. During the COVID-19 pandemic, the Insurance Company pressured the Complainant to pay the EMI. On 26.08.2020, the Complainant filed a claim with the Insurance Company, which was rejected based on clause "AC3". The Complainant then contacted the Insurance Regulatory and Development Authority of India (“IRDAI”) which directed the Insurance Company to review the claim. However, the claim was again rejected. The Complainant approached the Ombudsman, Delhi, who directed the Insurance Company to mediate, but the company did not comply. Feeling aggrieved, the Complainant approached the District Consumer Disputes Redressal Commission, North-East Delhi (“District Commission”) and filed a consumer complaint against the Insurance Company.

The Insurance Company didn't appear before the District Commission for proceedings.

Observations by the District Commission:

The District Commission noted that the Complainant's insurance claim was rejected by the Insurance Company based on clause AC3 of the policy, which stipulated a minimum survival period of 90 days after the occurrence of the insured event. Since the Complainant's husband survived only 23 days after the brain stroke, the claim was denied under this clause. However, upon reviewing the insurance policy submitted by the Complainant, the District Commission found no explicit mention of a 90-day minimum survival period requirement. It noted that the husband's death resulted from a major illness, specifically a brain stroke, which was covered under the policy terms.

The District Commission referred to the decision of the National Consumer Dispute Redressal Commission (NCDRC) in the case of ICICI Lombard General Insurance Company Ltd. Vs. Neema Saini, where it was held that death from medical issues not explicitly listed in the policy could still be considered under major medical illnesses covered by the insurance.

Therefore, the District Commission held the Insurance Company liable for deficiency in service. Since the Complainant's husband already paid Rs. 99,214/- towards the loan, the remaining insured amount was calculated to be Rs. 16,00,786/-. The District Commission directed the Insurance Company to pay this amount to the Complainant. Additionally, the Insurance Company was ordered to pay Rs. 50,000/- for mental harassment to the Complainant along with Rs. 25,000/- for litigation expenses.

Case Title: Rashmi Gupta vs the Manager, Universal Sompo General Insurance Co. Ltd.

Case Number:148/21