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Dealing with a plea of a 32-year-old man seeking death claim after his mother’s death, a bench of president Rajbir Singh and members Jasvinder Singh and Suman Rana also ordered Rs 11,000 towards mental harassment and agony suffered by the complainant.

“Considering the totality of the facts and reasons stated hereinbefore, the opponent was not justified in declining the claim to the complainant after the death of the insured; instead of sanctioning the claim, it was a sheer act of negligence and deficiency in service on the part of the opponent; therefore, we have no hesitation in saying that the present complaint deserves acceptance against the opponent.” the commission said on August 19.

The order pointed out that the opponent is only trying to back out from the contract, and it is a general observation that in several cases, the insurance companies are issuing policies based on the statements made by the proposer in utmost good faith, but when it comes to settlement of claims, they start examining the matter under the microscope.

Rejecting the insurer’s argument of delay in filing the claim, the commission stressed that the time three months and nineteen days of delay in intimation is not too much delayed time, because, after death of any person, the family members would have come out from the trauma of loss of their family member and the opposite party has not disputed the death of the life insured in any manner.

A woman purchased three life insurance policies from LIC through an agent, totaling a sum assured of Rs 15 lakh, naming her son as the nominee. Following her death on March 1, 2022, her son filed a claim for the death benefits.

Dissatisfied with the rejection, the son filed a complaint before the consumer commission. He argued that his mother had not concealed any material information while obtaining the three LIC policies. He contended that the proposal forms were filled in by LIC’s agents, and therefore any omission regarding existing policies could not be attributed to his mother. He also argued that LIC had wrongly repudiated the genuine death claim and had committed deficiency in service.

Appearing for the LIC, advocate Rajiv Kumar Gupta argued that the deceased woman had failed to disclose her existing insurance coverage and had concealed the fact that her proposal with another insurance company had been postponed due to diabetes.

It was also contended that the death claim was reported three months and 19 days late, beyond the prescribed 90-day period. Therefore, LIC maintained that the repudiation was justified and there was no deficiency in service.

The commission noted that the proposal forms were filled out in English by LIC’s own agents, whereas the insured only signed in Hindi. The agent explicitly noted policy details in one form, proving the agent was aware of the existing coverage. Any failure to list previous policies was an administrative error by the agent, not intentional concealment by the insured.

It added that since all three policies were issued by LIC itself within a span of a few months, the insurer had all records in its own database. LIC’s system should have flagged existing policies upon generation, making it unreasonable to penalise a non-English-speaking insured for non-disclosure.

The commission concluded that denying a genuine claim by scrutinising details under a “microscope” post-demise amounts to a deficiency in service and unfair trade practices.

The judgment underscores that insurers cannot repudiate genuine claims by mechanically relying on technical omissions, particularly where their own agents filled proposal forms. It reinforces insurers’ duty to verify information within their records and cautions against scrutinising claims excessively after an insured’s death, strengthening consumer protection against unfair claim rejection.

Consumers facing similar grievances may contact the consumer helpline in their respective states (Haryana helpline: 1800-180-2087) or dial the National Consumer Helpline at 1915 for assistance.

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