Definition of consumer includes beneficiary

The National Commission observed that the nominee is the rightful claimant under a policy, hence there was no merit in the objection that she couldn't file a complaint

Vijay Kumar Babulal Verma was an employee of the Oriental Bank of Commerce. He bought a life insurance policy from Reliance Life Insurance, which had a coverage of Rs 1 crore, 10 times the annualised premium, or 105 per cent of the premium paid by the date of death. Verma had to undergo a medical fitness examination before the policy was issued.
 

Verma met with a road accident on October 27, 2015, while riding a two-wheeler. He sustained severe head injuries and was found unconscious on the road. He was initially taken to Government Hospital Karnal and later transferred to Medanta Hospital in Gurgaon, where he passed away on November 9, 2015.
 

Nirmala Devi, Verma’s mother and the nominee in the policy, filed a claim on December 15, 2015. The insurer investigated the claim as death had occurred within a short period following the policy’s issuance. The claim was rejected on the ground that the insured had not disclosed a previous concussion resulting from a head injury incurred one year prior to obtaining the policy.

Nirmala Devi filed a complaint with the National Commission, challenging the repudiation. She claimed that only Reliance had rejected the claim, while Life Insurance Corporation had settled similar claims without any issues. She requested that Reliance be directed to settle the claim, and also sought compensation as well as litigation costs.
 

Reliance contested the complaint, arguing that the insured had previously suffered a concussion due to a head injury and had been prescribed medication and rest for 10 days. Reliance contended that withholding this information violated the principle of uberrima fides, meaning utmost good faith. It further argued that a nominee in a policy was not entitled to file a consumer complaint, as a nominee could not be considered a consumer.
 

The National Commission observed that the accident had occurred within one month and seven days of the policy’s issuance date. It also noted that the decision to issue the policy had been taken after a medical examination conducted by doctors empanelled with the insurer.
 

Regarding the suppression of information, the Commission noted that the question in the proposal form about previous hospitalisation for illness had been answered in the negative. The Commission concluded that this question pertained solely to hospitalisation for illness and was unrelated to hospitalisation due to injury. Moreover, neither the earlier medical records indicated that the insured had been advised against riding a two-wheeler, nor was there any other evidence linking the previous injury to the present accident. Consequently, the Commission concluded that there was no concealment of facts and deemed the claim payable.
 

Addressing the technical objection regarding the maintainability of the complaint filed by a nominee, the National Commission observed that the definition of a consumer includes a beneficiary. As the nominee is the rightful claimant and beneficiary under a policy, the Commission found no merit in the technical objection raised by the insurer.
 

Accordingly, in its order dated August 8, 2023, delivered by Subhash Chandra, the National Commission ordered Reliance Insurance to settle the claim according to the terms of coverage under the policy. It also awarded a 9 per cent interest of the date of the claim and Rs 50,000 towards litigation expenses.

The writer is a consumer activist