“There is no fault on behalf of the complainant which could show that she had not complied with the terms and conditions of the insurance policy. Therefore, the complainant is entitled to this amount of Rs 3 lakh, which she has given to the opposite parties (insurance company) as installment,” the August 31 order read.
Misappropriated money
The woman claimed that the employees of the insurance company offered her an insurance policy for five years and assured her of lavish benefits at the time of maturity or death and during the next 10 years. She claimed that the employees misrepresented the policy and provided incomplete information about it, inducing her to invest in the policy.
Later, the officials of the insurance company collected the policy amount of Rs 2.99 lakh and issued the policy on October 26, 2017 in favour of the complainant. In March 2019, the complainant claimed that she had given a cheque to the officials of the insurance company for the premium, which an employee said had been lost, and asked her to issue another cheque in April 2019.
Accordingly, the woman issued another cheque, and the employee deposited it in the bank. The amount was debited from her account on May 2, 2019, for Rs 2.93 lakh. However, the woman claimed that the said amount was reversed and credited to her bank account on May 8, 2019. The complainant then contacted the officials of the insurance company, but they did not give her a satisfactory response.
Later, the official asked her to pay the premium for the next two years, which was around Rs 5.87 lakh. The complainant allegedly paid the amount, but that amount also reverted to her account in October 2020. When the complainant asked the officials, she was told that the policy had lapsed. She moved the commission alleging that the officials of the insurance company had kept this amount of Rs 5.87 lakh for four months without her consent. She alleged deficiency in service by the insurance company and its officials. The woman was represented by advocate Ravinder Kumar before the commission.
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Insurance company’s defence
The insurance company, through advocate Rakesh Chaudhary, submitted that its officials had provided the policyholder with a copy of the application form along with the policy documents. The complainant was also provided with a free-look cancellation option, he added.
Chaudhary mentioned that the woman had the option to cancel the policy under the free-look period, i.e. 15 days from the date of receiving the policy documents. But the complainant never approached the officials during the free-look period after receiving the policy documents. The lawyer ultimately sought the dismissal of the present complaint.
‘No explanation of reverting amount’
It was noted by the commission that the Rs 5.87 lakh was returned to the woman’s bank account after more than three months, and for more than three months it remained with the insurance company. “Why this amount has been reverted back to the account of the complainant has not been explained,” it pointed out.
The commission also held that there was no fault on the part of the complainant as the amount of the instalment was to be automatically deducted from her account, but this was not done. Even after making payment of the installments through cheque, the amount was first deducted from her account but was again deposited in her account for reasons “best known” to the insurance company.
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“No letter or repudiation letter has been given by the opposite parties (officials of the insurance company) to the complainant which could show that the complainant had not complied with the terms and conditions of the insurance policy,” it found.
The commission noted that the insurance company mentioned that the complainant’s policy had lapsed, but found that it had not provided any reason for the lapse of the policy.
The commission directed the insurance company to pay Rs 3 lakh to the complainant within 30 days. The commission also pointed out that the company forced the woman to file the complaint and should pay Rs 30,000 on account of mental tension and harassment and Rs 20,000 towards litigation expenses.
Takeaway
This ruling highlights that an insurance company cannot declare a policy lapsed without clearly explaining the reason, especially when the customer was not at fault for the payment issue.
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Aggrieved consumers may contact the consumer helpline in their respective states (Himachal Pradesh: 1800-180-8087) or call the National Consumer Helpline at 1915 for assistance.
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