In a case of LIC, the Supreme Court said that a claim made on the expiry of the term of the policy can be dismissed due to non-payment of premium of an insurance policy. The top court also said that the terms and conditions of the insurance policy should be strictly interpreted.
Jaisalmer: Suppose you have taken an insurance policy, but since you have not paid the premium, its term is over, can you make an insurance claim? Or can your insurance claim be rejected? The Supreme Court has commented on LIC (Life Insurance) in one such case. The Supreme Court held that a claim made on the expiry of the term of the policy can be dismissed for non-payment of premium of an insurance policy. The top court also said that the terms and conditions of the insurance policy should be strictly interpreted. The apex court made this observation while setting aside the order of the National Consumer Disputes Redressal Commission (NCDRC) which had ordered additional compensation in case of road accidents.
A bench of Justices Sanjiv Khanna and Bela M Trivedi observed that it is a well established legal position that the person insured needs to be in good faith in the contract of insurance. “It is clear that the terms of the insurance policy have to be well understood and it is not permissible to rewrite the contract by interpreting the terms and conditions of the policy,” the bench said.
what was the case?
The top court was hearing the appeal of Life Insurance Corporation (LIC) against the decision of the NCDRC, which quashed the order of the state commission. In this case, the woman’s husband had taken a life insurance policy of Rs 3.75 lakh from the Life Insurance Corporation under the Jeevan Suraksha Yojana. Under this, an additional amount of Rs 3.75 lakh was to be paid by LIC in case of accidental death. The insurance premium of the said policy was to be paid every six months, but there was a default in payment.
On 6 March 2012, the complainant’s husband was injured in an accident and died on 21 March 2012. After the death of the husband, the complainant filed a claim before LIC and an amount of Rs.3.75 lakh was paid to him. However, the additional amount of accident claim benefit of Rs.3.75 lakh was denied. Therefore, the complainant approached the District Forum with the complaint requesting the said amount for accident claim benefit. The District Forum, accepting the appeal of the woman, directed to pay an additional amount of Rs 3.75 lakh for the accident claim benefit.
The State Consumer Disputes Redressal Commission quashed the order which was challenged in the National Consumer Disputes Redressal Commission. The NCDRC quashed the order passed by the state commission.