Genuine Insurance Claims Must Not Be Repudiated Solely Based On Delay, Bihar State Commission Sets Aside Repudiation Made By LIC

Brief Facts:

The Complainant's wife secured a double accidental claim benefit from the Life Insurance Corporation of India (“LIC”). The Complainant was made her nominee. Subsequently, she passed away on 06.08.2003 in a firing incident, for which an FIR was registered with the local police station, under the Arms Act and the IPC. The Complainant informed LIC and requested the assured sum of Rs. 3 Lakh. However, he could not submit the 'claim form' for 4.5 years because he remained in jail after getting implicated in a criminal case. Finally, after being acquitted of the criminal case, he submitted the claim form. However, LIC repudiated it on the basis that the claim was time-barred, as the form was submitted 3 years after the deadline. Feeling aggrieved, the Complainant filed a consumer complaint in the District Consumer Disputes Redressal Commission, Gopalganj, Bihar (“District Commission”) against LIC and its agent.

LIC submitted that the Complainant failed to inform about the death of his wife within a reasonable period. A death certificate was obtained by the Complainant after 7 years of her death and then submitted to LIC after a gap of 1 year. On the other hand, the LIC agent stated that he had informed LIC about the death incident.

The District Commission agreed with the arguments put forth by LIC and dismissed the complaint based on the time-barring nature of the claim. Dissatisfied by the order of the District Commission, the Complainant filed an appeal in the State Consumer Disputes Redressal Commission, Bihar (“State Commission”).

Observations of the State Commission:

The State Commission observed that the Complainant was supposed to submit the claim within 3 years of the incident. However, he got engaged in a criminal case and was imprisoned for 4.5 years. After his acquittal, he obtained the death certificate and filed the claim before LIC with all other relevant documents. However, the claim was repudiated for being submitted after 8 years of the death incident.

The State Commission held that when the claim is genuine, it should not be repudiated solely on technical grounds such as delay. The State Commission emphasized the fact that the Complainant underwent a lot of misfortune and hardships. Firstly, his wife succumbed to injuries due to gunshots and secondly, he got arrested in a criminal case which was instituted much before the death of his wife. Thus, the delay was properly explained and justified. The State Commission referred to the IRDA Circular, dated 22/04/2015, where it was stated that insurance companies must not reject bonafide and genuine claims solely on the grounds of delay.

Consequently, the appeal was allowed and the repudiation by LIC was set aside. LIC was directed to reconsider the claim on merit within 6 months. The State Commission did not make any observation concerning the Complainant's entitlement. The same was left for LIC to decide on its merit.