Hope of patient's recovery can put paid to insurance claim

Kiritchandra Modi had taken a personal loan of Rs 27,500 from GE Countrywide Consumer Financial Services, which was to be repaid in 24 equated monthly instalments (EMIs) of Rs 1,870. He simultaneously applied for coverage under GE Country Wide Dual Shield Insurance Scheme, which insured the company's members against accidental injury resulting in permanent disability through a master policy issued by SBI Life Insurance. Modi had to pay 1.85 per cent of the EMI as premium for a maximum shield cover of Rs 2 lakh and a maximum pay cover of Rs 5 lakh.

The term "total permanent disability" was defined under the policy as a bodily injury resulting directly from an accident caused by outward, violent and visible means, such that the life assured becomes totally and permanently disabled in a manner that he would never again be able to conduct any normal work, occupation or profession to earn as he did prior to the accident. Such disability must occur solely due to the accident within 120 days and result in total and irrecoverable loss of sight in both eyes; or loss by severance of two or more limbs at or above wrists or ankles; or total and irrecoverable loss of sight in one eye; or coma for at least 60 days.

Modi met with a road accident in June 2005. He went into coma immediately. The police were informed. Modi was initially admitted to Rangoli Hospital in Bharuch and later shifted to Amin General Hospital in Vadodara, where he regained consciousness after two months. He had suffered Segmental Open Tibia/Fibula of the left leg, which would take 18 to 24 months to recover. He was told that the disability would be permanent and he would be able to do only light work.

Modi lodged a claim under the policy, contending that he had suffered permanent disability due to the accident. As the insurance company repudiated the claim, Modi filed a complaint before the Bharuch district consumer forum. GE Countrywide claimed that it could not be held liable, as it had merely provided the loan and routed the premium to the insurer. Since it was not the insurer, the company argued that the complaint against it was not maintainable. SBI Life Insurance justified the repudiation, stating that Modi's disability was not a "total permanent disability" as defined under the policy.

The consumer forum held that the claim was payable, as Modi's lower left leg had suffered 55 per cent disability. The insurance company was ordered to pay Rs 1 lakh with 8 per cent interest, plus a nominal compensation for mental agony and costs of litigation. SBI challenged this order before the Gujarat Consumer Disputes Redressal Commission. but its appeal was dismissed.

SBI filed a revision before the National Consumer Disputes Redressal Commission, pointing out that the policy covered only one kind of disability - total permanent disability. Since Modi's disability did not fall into this category, the insurance company argued that the claim had been rightly rejected.

The national commission considered the medical reports. It found that head injury was recorded but there was no mention of coma. It also recorded a difficulty in walking and sitting, and pain and swelling in the ankle joint, which disability has been termed as partial permanent disability assessed at 55 per cent of left lower extremity.

In its judgment of October this year, delivered by the Bench of Justice Ajit Bharihoke and Member Rekha Gupta, the national commission observed that the policy covered total permanent disability and not partial permanent disability. Besides, Modi's disability had not even resulted in a termination of his services by ONGC where he was working as an engineer. The commission observed that it was a well settled law that the policy terms would have to be constructed strictly. Neither can the insured claim benefits which are not specifically covered, nor can the courts extend the scope of the policy.

Accordingly, the National Commission set aside the orders of the District Forum and the State Commission and dismissed the complaint, upholding the insurance company's contention that the claim was not payable.

The author is a consumer activist