Saturday, January 31, 2009

LIC fined for denying insurance claim on acquiring permanent disability on the grounds that Claimant was capable of earning his wages, despite disability

31 Jan 2009 |  SCDRC, Delhi

Consumer Case; Acquired Permanent Disability of 69%  as a result of accident; Claim rejected on grounds that claimant hasn't lost his wage earning capacity; claimant's continue to work in Delhi Police despite disability under proection of Persons with Disabilities Act 1995.

Question of Law: Can LIC deny insurance claim of having acquired disability as a result of accident  on the ground that claimant was capable of earning wages, since he was allowed to continue working with Delhi Police for compassionate reasons.  

The state consumer commission has hit out at Life Insurance Corporation of India (LIC) for rejecting the rightful claim of a poor consumer on a flimsy ground. LIC denied the claim of a disabled police constable on the grounds that he had not suffered permanent disability. Disagreeing with this, the commission has asked LIC to pay Neeraj Kumar his entitled claim that covers permanent disability benefits to the tune of Rs 1.5 lakh and a compensation of Rs 25,000.

Background of the case

Neeraj Kumar, a resident of Burari, suffered an electric shock following which his right arm below the elbow had to be amputated. After obtaining a permanent disability certificate from doctors of Safdarjung Hospital, he filed a claim with the company. Despite the doctors assessing permanent disability to the extent of 69%, LIC rejected his claim on the ground that he was capable of earning wages, since he was allowed to continue working with Delhi Police for compassionate reasons.

Order of the Commission

The commission, headed by Justice J D Kapoor, observed that had the consumer applied for the post of constable now, he would not have got the job. Therefore, to reject such a claim on such a premise was nothing but logic chopping, oppressive and malafide interpretation of beneficial contract, the commission observed.

"Merely because a person with permanent and total disability continues to be employed on compassionate basis does not mean that he has forfeited the benefit of permanent disability arising from the insurance policy,'' Kapoor added.

Justice Kapoor also asked the insurance sector not to adopt such an approach and be consumer friendly. The consumer should not be made to run from pillar to post or else they should be ready for the consequence of recovery of compensation amount from the salary of the officials, he said.

Source: Times of India

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