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Consumer Forum Cases in Insurance against insurance company
A consumer court ordered Tata AIG to pay Rs 1 crore to an elderly woman whose son was murdered in 2002
The insurer, Tata AIG General Insurance, claimed that Maya Devi Gupta’s son, Mahesh, had taken the insurance with fraudulent intentions and “misrepresentation of facts”. Therefore, the entire accident guard policy of Rs 1 crore was null and void, the company claimed.
According to Gupta, Mahesh had taken the policy in 2002 and had paid a premium of over Rs 14,000. She was named the beneficiary of the policy.
A few months after he took the policy, Mahesh was shot dead by unidentified persons. Police investigation revealed that Gupta’s younger son, Mahavir, had connived with some of his aides to kill Mahesh in order to claim the insurance money.
In September 2013, Gupta received a letter from the insurance company informing her that her claim was being rejected because, according to police chargesheet, the insurance policy was taken through fraudulent means.
The State Consumer Commission has ordered a top insurance company to pay Rs 1 crore to an elderly woman who was denied the claim on the grounds that her son — the policy holder — was murdered by her younger son.
Tata AIG claimed that it was Mahavir who had handed over the policy premium and application forms on behalf of Mahesh. Later, he was chargesheeted for Mahesh’s murder. It also questioned why Mahesh’s wife, Laxmi, was not made the beneficiary of the policy, instead of his mother.
Stating that there is no rule which mandates that the spouse of the insured should be nominated as beneficiary, judicial member N P Kaushik said the company’s objection was without merit.
“It is also wrong to say that the insurance company got to know of the incident late. When the policy holder died, the insurance company was part of the investigations, and as such, they came to know of it immediately after the incident happened. This is evident from the letters and communication with police placed on record,” Kaushik said.
As far as Mahavir’s involvement in the murder, a criminal conspiracy is always hatched in secrecy. Thus, it is not possible to establish what the accused persons were thinking prior to the incident, the commission ruled.
“Absolutely no evidence has come on record to establish that prior to the incident, the accused had ever met or there was any agreement between them to commit this dastardly act,” the commission said.
The trial court had earlier rejected the theory that insurance amount was the motive of murder because if that was the case, then Mahesh would have named Mahavir as the nominee and not his mother.
“After his mother, the amount would have fallen to all legal heirs and not just to Mahavir,” the commission observed. It said the insurance company had committed “grossest deficiency” in not paying Gupta her claim and ordered the company to pay her Rs 1 crore within a month.
Reliance Gen to pay claims amount plus penalty of Rs 1lakh for not settling claim
In year 2010, Mr. Subash Waatkar, a resident of Thane (Maharashtra), a Motor owner having Motor Insurance Policy of Reliance General found that his vehicle was missing or say was stolen on January 22, 2012. He approached the Reliance General Insurance Company Limited, seeking the insurance amount of Rs 2.35 Lakhs for his vehicle.
Though, Mr. Waatkar, after filing a FIR with the police, approached the insurer very day when his vehicle went missing, but the insurer rejected the claim on the grounds that he did not inform the company about the loss of the vehicle within the stipulated time. The company, in its letter to the complainant, had maintained that there was a delay of 215 days in informing it about the loss and thus the claim was rejected.
Then the complainant moved to the Thane Consumer Forum. The forum checked with the evidence, it found the insurance firm was responsible for rejecting the consumer's claims on false reasons, and asked the firm to compensate for the complainant's losses.
The Thane Consumer Forum has ordered Reliance General Insurance Company Limited, to pay a compensation of Rs 2.5 lakh to complainant, for not paying the vehicle insurance amount on the basis of absolutely unreasonable reasons.
In addition to this, the forum has also directed the insurer to pay another Rs. one lakh towards penalty for the mental agony suffered by the complainant on account of the matter.
Accident is accident and is payable under Group Accident Policy (Madras HC Orders Oriental Insurance to Pay Compensation to Injured Worker)
In 2005 a worker named D. Siyasankar got his hand injured badly while shifting a granite stone at his work. He was administered 17 stitches at a private hospital and later shifted to a government hospital. He claimed that he had suffered a permanent disability of 15% and lost 17% of his earning capacity therefore he should be paid suitable compensation.
The employer said the injuries to Siyasankar were trivial and he had not reported with documents proving loss in his employment opportunities. Further, he was covered by a group insurance policy of Oriental Insurance. Sivasankar filed an insurance claim, but the insurer Oriental Insurance Company rejected it. The Sivasankar filed a complaint before the commissioner for workmen's compensation seeking a compensation of 1.5 lakh. The Deputy Commissioner of labour partially allowed the claim and ordered Oriental Insurance to pay Rs 53,394 to the claimant within a month.
Then the insurer moved the Madras High Court, saying, since it was a group personal accident policy, it did not cover a claim under the Workmen's Compensation Act. Unless the policy specifically covered a claim under the Workmen's Compensation act, no direction could be issued for making the payment, it said. The viewpoint of the Counsel for Sivasankar was that the insurance policy was valid at the time of injury, there was no illegality in the order. Justice R Mahadevan said an insurer could be directed to pay compensation even if it was not covered under the provisions of the Workmen's Compensation Act. As Sivasankar was injured during employment, he was correct in approaching the commissioner.
In a recent verdict, the Madras High Court has ordered public sector insurer Oriental Insurance Company Limited to pay compensation to a worker injured on duty.
“The concept of insurance is to indemnify the insured against the claims” the court added.
Prakash Sadhwani Vs Life Insurance Corporation of India
Case: On the death of his son Prakash Sadhwani lodged claim documents for Rs. 5 Lakhs. LIC rejected the claim on the basis that insured was having pre-existing disease at the time of buying the policy. Prakash Sadhwani took up the case in Delhi District Consumer Forum.
Judgment: Dec. 2012 – The District Consumer Forum decided that LIC should pay the following.
Claim Amount Rs. 5,00,000
Award for deficiency & harassment Rs. 1,00,000
Litigation Expenses Rs. 50,000
Total Rs. 6,50,000
While awarding the Judgement the bench noted: “The bench noted that the evidence given by Sadhwani showed that it was on February 2, 2007, that his son was detected with a cardiomyopathy and there was no history of any disease prior to 2D echo cardiography”. Hence LIC should pay Rs. 6.50 Lakhs (Claim+ Award for deficiency & harassment+ Litigation Expenses)
Implication: It is one of the many cases which are going to Consumer Forum. General tendency of Life Insurance Companies is to deny claim lodged within 3 years of issue of insurance policy.
IFI welcomes this Judgement.
Life Insurance Corporation of India Vs Haryana Consumer Disputes Commission
Case: There was undue delay in passing claim by LIC and the consumer had gone to Haryana Consumer Disputes Commission. Their Judgement was that claim be paid and concerned official should pay penalty out of his own pocket. LIC decided to take the case to National Consumer Disputes Redressal Commission in the form of revision petition. Their stand was that LIC is ready to pay penalty as a corporation/company and officer should not be compelled to pay out of his own salary/ pocket.
Judgment: National Consumer Disputes Redressal Commission disposed the petition and maintained that officer of LIC should pay penalty out of his own pocket. The Commission observed that there was ‘dereliction of duty’ by the LIC officers and instead of tackling the problem; it had challenged the state commission’s order.
Implication: You will be surprised to know that policy was for Rs. 1 Lakh only and case has been going on since 2004. It is a landmark Judgement and will be welcomed by consumers located all over the country. It will discoverage officials in claims department of Life/ Non Life/ Health Insurance Companies to go on rejecting claims.
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ASSOCHAM - 10th Global Insurance Summit on 22nd September 2017 at Hotel Taj Lands End, Mumbai   more........
 
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ASSOCHAM - 10th Global Insurance Summit on 22nd September 2017 at Hotel Taj Lands End, Mumbai
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