Family Awarded ₹9 Lakh Compensation as NCDRC Rules Against IDBI Federal Life Insurance

In a case that highlights the importance of fairness in insurance practices, the National Consumer Disputes Redressal Commission (NCDRC) recently ruled in favor of the family of Lakkha K. Panjabi. After a prolonged legal struggle, the family was granted the full sum assured of ₹9,00,000, along with interest, following the denial of their life insurance claim by IDBI Federal Life Insurance Co. Ltd (Ageas Federal Life Insurance).

A Family’s Loss and Struggle for Support 💔

In 2011, Lakkha K. Panjabi purchased a life insurance policy worth ₹9,00,000. Tragically, just a few months later, he passed away due to cardiac arrest. As the nominee of the policy, his family sought financial support by filing a claim with the insurer.

To their shock, the claim was rejected. The insurance company alleged that the deceased had failed to disclose an earlier insurance policy worth ₹9,14,400 in the application form. According to the insurer, this omission constituted a breach of the terms, and the claim was denied.

The rejection left the grieving family not only emotionally shattered but also financially burdened. Feeling that the denial was unjust, they sought redress through the consumer court system.

Arguments Presented by the Family 🗨️

The family contended that the insured had answered all the questions in the application form truthfully and to the best of his understanding. They argued that the rejection was based on unproven allegations and was unfair.

They maintained that the insurer’s actions amounted to a deficiency in service, leaving them without the financial support the policy was meant to provide during such a devastating time. The family sought the full sum assured along with compensation for the emotional distress caused by the denial.

The Insurer’s Position 🏢

IDBI Federal Life Insurance Co. Ltd. argued that the insured had not disclosed an earlier insurance policy and that this information was critical to the underwriting process. The company stated that had it been aware of the earlier policy, it would not have issued the new one.

The insurer claimed that this constituted a violation of the duty of good faith required in insurance contracts, and they stood by their decision to deny the claim.

What the NCDRC Observed 🔍

After carefully reviewing the evidence, the NCDRC found the insurer’s stance lacking in several key areas:

1. Unclear Application Form: The court noted that the insurer’s application form was ambiguous in its questions about existing policies. It emphasized that such ambiguities should not be held against consumers.
2. Lack of Evidence: The insurer could not provide any concrete proof that the deceased had withheld information about other policies. Their claims remained unsubstantiated.
3. Responsibility of the Insurer: The court highlighted that it was the insurer’s duty to verify details before issuing the policy. Accepting premiums without due diligence and then denying claims later was deemed unfair.
4. Fair Interpretation: The NCDRC applied the principle that unclear terms in insurance contracts should always be interpreted in favor of the policyholder.

The Judgment ⚖️

The NCDRC ruled that the insurer’s denial of the claim was unjustified and ordered IDBI Federal Life Insurance to:

• Pay the full sum assured of ₹9,00,000, with 7% interest per year from the date of the complaint until payment.
• Additionally, pay ₹8,00,000 under a separate policy held by the deceased.
• Ensure that any delays in payment would attract 10% interest per year.

The court, however, set aside the additional compensation for mental anguish, stating that the awarded interest sufficiently addressed the delay.

A Case of Resilience and Justice 🕊️

This judgment marks the conclusion of a long legal journey for the Panjabi family. While it cannot replace the loss of their loved one, it reinforces the principles of fairness and accountability in insurance practices. Families purchasing policies for security deserve the assurance that their claims will be treated with integrity and respect.

Disclaimer: This article summarizes the judgment delivered by the National Consumer Disputes Redressal Commission (NCDRC), New Delhi, in Revision Petition Nos. 998/2020, 1023/2020, 427/2021, and 428/2021, concerning a dispute between IDBI Federal Life Insurance Co. Ltd. & Anr. and Lakkha K. Panjabi. The judgment was rendered on November 21, 2024,

The content of this article is intended for informational purposes only and should not be interpreted as legal advice. Readers are encouraged to refer to the official judgment for precise legal and factual details. The case outcome may vary under different circumstances and jurisdictional contexts. If you require specific legal assistance, please consult a qualified legal professional.