Rule change doesn't mean claim denial

The insurer claimed that the policyholder did not have a valid driving licence

The requirements for settlement of claims is not uniform, but varies upon the type of policy and its purpose. Chandrakant Bande was an agriculturist at Koregaon Bhivar village in Pune District. He was covered under the ‘Farmers Personal Accident Insurance Scheme’ of the Government of Maharashtra, which had obtained coverage from ICICI Lombard General Insurance.

Chandrakant met with an accident on December 21, 2005. His widow Lalita lodged a claim for Rs 1 lakh. The insurer repudiated the claim on the ground that Chandrakant did not hold a valid driving licence when the accident occurred. As the claim was not settled, Lalita filed a consumer complaint. The Pune District Forum, considering the insurer’s stand, refused to entertain the complaint and dismissed it. Lalita challenged this order in appeal.

The Maharashtra State Commission considered the scheme framed by state government. The government circular dated January 5, 2005 referred to the Farmers Personal Accident Insurance Scheme for one crore farmers, who were agriculturists by profession, to insure them against accidents resulting in death or permanent disability. The scheme covered, not only road and rail accidents, but also drowning, death by poison, shock due to electricity, riots, murder, and any other type of accident. 

When an agriculturist in the age group of 50 to 70 years dies in an accident, it adversely affects his family’s source of livelihood, so the scheme provides for a payment of Rs 1 lakh to the legal heirs as compensation.

The State Commission observed that the scheme does not envisage any exception and covers death or disability arising out of any kind of accident. So, whether a vehicle was being driven with or without a valid driving licence would be irrelevant in the context of the scheme.

The scheme had been subsequently amended by Government Resolution dated May 29, 2009 making it necessary to possess a valid driving licence for road accidents while driving a vehicle, and this was incorporated in the policy through a corrigendum. The Commission observed that such an amendment would become applicable only to subsequent claims. It would not be applicable to Bande’s death, as he had died on December 21, 2005, prior to the amendment. The Commission concluded that the change in the scheme and the amendment to the policy could not be made be applicable retrospectively. If such an interpretation is adopted, it would wrongly deprive the widow of the benefits she is entitled to under a welfare scheme.

Accordingly, by its order of August 8, 2017 delivered by Justice AP Bhangale along with Judicial Member DR Shirasao, the Maharashtra State Commission set aside the Forum order. It held that the repudiation was unjustified, and directed the insurance company to pay the compensation benefit of Rs 1 lakh within three months, or with 9 per cent interest, if delayed.

Thus, the documentation to be submitted for a claim have to be considered in the context of the policy, as per the terms and conditions prevailing on the date when the incident takes place. 

(The author is a consumer activist)