“The alleged delayed intimation of death of the deceased to the bank is not at all relevant in the present matter,” the commission said on September 15, holding that the premium ought to have been deducted when the earlier policy expired. It said the failure occurred due to “utter negligence on the part of the bank, be it a computer system error or otherwise”.
The dispute arose from a personal accident insurance policy Singh had obtained through the SBI. The policy provided personal accident cover of Rs 2 lakh, while the total sum insured was Rs 4 lakh. The annual premium was Rs 100 and was to be deducted from Singh’s savings bank account by the SBI and remitted to the insurance company.
Policy expired six days before fatal accident
The commission noted that Singh’s insurance cover for the relevant period was valid from December 15, 2015, to December 14, 2016. On December 20, 2016, he was travelling by motorcycle from Banchora to Dharasu when he met with an accident at about 6 pm. He suffered grievous injuries and died at around 11 pm.
Following this, his family lodged a claim through the SBI with the insurance company. The insurer rejected the claim on the ground that the premium for the subsequent policy had been received or deposited only on December 31, 2016, and Singh was therefore not insured on the date of the accident.
The SBI argued that the insurance policy was valid for one year and said premium deductions for subsequent years could occur automatically through the computer system. It also relied on the alleged delay in informing the bank about Singh’s death. The insurance company maintained that there was no insurance cover on the date of his death.
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Bank responsible for insurance gap
Focusing on when the premium should have been deducted, the commission noted that the bank admitted the Rs 100 premium was deducted only on December 31, 2016, even though the previous policy had expired on December 14. It also noted that the bank had not claimed there were insufficient funds in Singh’s account for the deduction.
The bench held that the SBI was liable for failing to get Singh insured for the period from December 15, 2016, to December 14, 2017. It found that the alleged delay in informing the bank about his death was not relevant because the premium should already have been deducted when the earlier policy expired.
The commission therefore upheld the direction to pay Singh’s family Rs 2 lakh with 6 per cent annual interest from October 10, 2017, the date the consumer complaint was filed. It also retained Rs 5,000 awarded towards litigation expenses.
However, it set aside another Rs 5,000 awarded for financial and mental agony, holding that interest and compensation for mental agony could not both be granted in the circumstances. The SBI’s appeal was therefore partly allowed only to that extent, while the remaining part of the district commission’s order was affirmed.
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Takeaway
Check that your insurance premium is deducted on time and that the policy remains active. The commission held the bank responsible for the gap in cover caused by delayed premium deduction and upheld the Rs 2 lakh accident benefit for the family.
For consumer-related grievances, individuals may contact the consumer helpline in their respective states and union territories (Uttarakhand: 1800-180-4188) or call the National Consumer Helpline at 1915 for assistance.
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