Murder Without Deliberate Act Of Insured To Be Treated As Accident For Insurance Claims, Says NCDRC [Read Order]

Asks insurance firm to make its terms and conditions clear apropos ‘murder’

Reiterating that murder of an insured person has to be treated as accidental death if the murder was not the result of any deliberate act of the insured himself, the National Consumer Disputes Redressal Commission (NCDRC) has come down heavily on insurance companies for not making terms and conditions of their policies clear with regard to ‘murder’ while directing the insurer in the instant case to discontinue its unfair trade practice apropos ‘murder’ with immediate effect.

“It is reasonable and logical to conclude that a person takes personal accident shield insurance policy to insure himself against accidental injury resulting in death caused by an unexpected and unintentional incident. In this case, there was no immediate deliberate willful act by the insured that led to his murder. Putting himself to risk of injury by immediate wilful deliberate act or carelessness or instigation or aggression etc. is not evident. Death was due to unexpected and unintentional incident i.e. an accident. ‘Murder’ per se was not specifically excepted in the policy. Hence, in the facts of this case, the death was clearly accidental and was squarely covered by the policy,” said a bench of presiding member SM Kantikar and member Dinesh Singh.

The commission also awarded compensation of Rs 4 lakh to the family for deficiency in service and for harassment caused due to unfair trade practice of the insurer company.

In the instant case, Balram Mulchandani, a resident of Thane, Maharashtra, had taken personal accident shield insurance policy from M/s Royal Sundaram Alliance Insurance Co. Ltd. for the period 05-11-2008 to 04-11-2009 for an assured sum of Rs. 20 lakh. He was getting the policy renewed from time to time. On January 21, 2009, Balram had gone to his office but did not return home.

The family lodged a missing person complaint and the police arrested some persons who had murdered Balram following some property dispute.

Balram’s son Pawan Mulchandani filed a death claim with the insurance company but it was repudiated on the ground that the death was not due to ‘accident’, but was a case of ‘murder simplicitor’. Aggrieved by the repudiation, the complainant approached the Maharashtra State Consumer Disputes Redressal Commission which directed the insurer to pay Rs. 20 lakh along with interest of nine percent and cost of Rs. 25,000.

The insurer approached the NCDRC in challenge and relied upon the judgment of the apex court in Rita Devi Vs New India Assurance Co. Ltd., wherein it was held that: “It is not as if every case of murder would be an accident. The murder too could be accidental, but would depend on the facts and circumstances of each case” and that if the dominant intention of the act of felony is to kill any particular person, then such killing is not an accidental murder, but is a murder simplicitor, which was not within the scope of the policy.”

The complainant, on the other hand, argued that the company had wrongly rejected their claim and relied upon the judgment of NCDRC in case titled Maya Devi vs. LIC of India wherein the insured person was shot dead following an altercation with a shopkeeper.

Quoting from the Halsbury’s Law of England, which, while defining what is ‘accident’ said that “even willful murder may be accidental as far as the victim is concerned”, the commission had held in Maya Devi’s case that the death of the insured was accidental, because the immediate cause of injury was not the result of any deliberate or wilful act of the insured and the untoward event that had occurred was not expected or designed by the insured.

The commission had further quoted from Halsbury’s Law of England to say in that “…if the immediate cause of the injury is the deliberate and wilful act of the insured himself, there would seem to be no accident, and no claim will lie under the policy, at any rate if the insured is not mentally disordered at the time of his act”.

After hearing both sides, the commission referred to the case titled Nisbet vs. Rayne and Burn in which it was held that murder was an accident from the stand point of the person, who suffered from it.

The commission also noted that murder was not excluded in the exception clause of the policy and upheld the order of the State Commission. It further directed the insurer to pay Rs. 4 lakh compensation to the family within four weeks.

Exclusion clause, gaps and anomalies

While deciding the appeal, the commission stated that “Contra Proferentem Rule” applicable to insurance policies says that in case of ambiguities in the insurance policy the interpretation has to be done in favour of the insured.

“In the case Maya Devi vs. LIC of India, this Commission also referred to the exclusion clause referred to under the policy. We have also gone through the terms and conditions of the insurance policy in question, under the heading ‘Exceptions’. Nowhere under the said clause it has been stated that the insurance company was not liable to pay the claim in case of murder. It has been stated that if there was an intentional self-injury, suicide or attempted suicide the claim was not payable. It has also been stated that in the case of any war, rebellion, revolution, insurrection, mutiny, military or usurped power, etc. the claim was not payable. The facts and circumstances of the present case reveal, however, that none of these clauses is applicable in the present case and hence the repudiation of the claim by the insurance company was not justified,” it said.

It also relied on the order passed by the commission in Taj Devi vs. National Insurance Company Ltd. & Ors., wherein it held that murder of the life assured was not excluded under the terms of the insurance company. This order was challenged before the Supreme Court but upheld.

While deciding the case at hand, the commission took a strict view of the gaps and ambiguities in the insurance policies which, it said, resulted in consumer complaints.

“Had gaps and ambiguity, in respect of murder being covered or not covered in the policy, and if conditionally covered under what facts and situation it may/will be inquired into to determine whether or not it was accident, not been there, a plethora of consumer disputes and resultant plethora of rulings of different fora/courts could have been avoided.

“For future, rather than examining every/select cases subsequent to the event, litigating every/select cases, it is apt and necessary that the gaps and ambiguity be removed, the unfair trade practice be discontinued,” it said.

The commission then ordered, “The insurance company is directed to discontinue its unfair trade practice apropos ‘murder’ with immediate effect. If murder is excepted, it shall be included explicitly and categorically in the exceptions. If murder is an accident or is not an accident has to be inquired into and determined in every / select case, the same shall be stated explicitly and categorically in the policy. The insurance co. shall ensure that its terms and conditions and position in respect of ‘murder’ are explicitly and categorically conveyed to the ordinary consumer ab initio, at the time of purchase of the policy. (The articulation is at the wisdom of the insurance company, and will be subject to scrutiny of this Commission.) A report-in-compliance shall be filed by the chief executive of the insurance company with this Commission within three months.”