Insurer Ordered To Pay Rs 35 Lakh After Seven‑Year Fight Over Rejected Life‑Cover Claim

A Punjab consumer commission has directed Aditya Birla Sun Life Insurance Company to pay Rs 35 lakh to the widow of a policyholder after the insurer repudiated a life‑insurance claim soon after the policy was issued. The dispute, which moved through multiple consumer fora over several years, centred on whether the insured had failed to disclose existing policies when buying a plan in 2016 and whether that alleged omission justified the denial of an accidental death claim in 2017.

Policy Purchase, Death, And Initial Repudiation

In November 2016, the deceased purchased a life insurance policy providing a sum assured of Rs 35 lakh. He died by drowning on 13 March 2017, about four months after the policy commenced. While an earlier policy was settled, the 2016 policy was repudiated by the insurer in July 2017 because the proposal form did not disclose other insurance covers. The widow took the matter to consumer courts, saying the claim was wrongly denied because the death was accidental and there was no proof of any intent to mislead, according to a recent report by The Indian Express.

Tribunal Finds Insurer’s Grounds Weak

After the National Consumer Disputes Redressal Commission (NCDRC) remanded the matter for fresh consideration, the Punjab State Consumer Disputes Redressal Commission re‑examined the facts. The panel scrutinised the proposal form, agent involvement, and underwriting records. It observed the form appeared computer‑generated with several fields mechanically marked “No” or “NA”, creating doubt whether the insured personally completed the entries. The commission also noted the insurer had itself earlier issued another policy to the same person, weakening any argument that multiple covers were concealed from the company. Given the accidental death, consistent premium payments, and lack of documentary proof of misrepresentation, the tribunal found the insurer’s repudiation unjustified.

Legal Principle Applied And Relief Ordered

Applying established precedents, the commission emphasised that non‑disclosure of other policies does not automatically equate to suppression of material facts in every life insurance case, particularly where death is accidental, and there is no indication of fraud. The panel ordered payment of the full Rs 35 lakh, directed that all applicable benefits be disbursed, and awarded interest at seven per cent per annum from 28 November 2018 until payment. The insurer was given 45 days to comply and was also directed to bear costs for the delay.

Practical Takeaways For Policyholders And Insurers

The ruling reminds policyholders to keep copies of proposal forms and any communications with agents so they can back up valid claims. For insurers, it signals that tribunals will probe the substance of alleged misstatements and will not let minor form errors override clear evidence that no fraud occurred. The order also makes clear that accidental deaths must be examined on their facts, and that straightforward underwriting and accurate record‑keeping help prevent long, costly disputes.

FAQs

Why did the consumer commission order payment despite the insurer’s repudiation?

The tribunal found no documentary proof of fraud or intentional nondisclosure, noted inconsistencies in the proposal form and prior dealings with the insurer, and held that accidental death warranted full payment.

What relief was awarded to the widow?

The commission directed payment of Rs 35 lakh with interest at seven per cent per annum from 28 November 2018, ordered disbursement of all applicable benefits, and made the insurer pay costs for the delay.

What should policyholders do to avoid similar disputes?

Keep copies of proposal forms and all agent communications, disclose existing covers accurately, and maintain consistent records to support claims if contested.