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Insurance company must ensure policy details are communicated to policyholders

Citation : Anju Kalsi vs HDFC Ergo General Insurance Company Limited and Another, Civil Appeal Nos 1544-1545 of 2022

Date of Judgment/Order : February 21, 2022

Court/Tribunal : The Supreme Court Of India

Corum : Dr Dhananjaya Y Chandrachud & Surya Kant, J.

Background

The appellant’s son obtained the benefit of an insurance cover under a policy called the “Cardsure Package Policy”. The appellant’s son was an account holder with HDFC Bank Limited and had availed of a debit card from the bank. The bank, which is the second respondent, obtained an insurance cover on 3 September 2013 from the first respondent. The insurance cover was to commence from 25 August 2013 and was to end on 24 August 2014. Against the payment of premium by the bank to the insurer, the insurer provided an insurance cover for card holders of the bank. The insurance cover had 2 special conditions subject to which the insurance claim would be accepted.

The appellant’s son died in a road accident on 30 October 2013. The appellant as the mother of the deceased and nominee made a claim under the insurance cover. The claim was repudiated by the insurer on 17 December 2013 on the ground that the deceased had not fulfilled the 'Special Conditions' during the time he was insured.

The District Forum allowed the claim but the State Forum disallowed the same as it held that the conditions were not fulfilled. The order of the SCDRC was affirmed by the NCDRC.

The genesis of the dispute lies in whether the insured or his heirs were informed of the Special Conditions of the policy.


Judgment

The two conditions which have a bearing on this issue are respectively, conditions 5 and 9 of the ‘Special Conditions’ forming a part of the insurance cover. The insurance cover was provided by the first respondent to the second respondent, but the debit card holders of the bank were beneficiaries of the cover of a insurance.

The contention of the appellant was that save and except for the covering letter which indicated that an insurance cover against personal accident was being provided to the account holder, neither the insurer nor the bank had ever furnished the insurance policy, its terms and conditions or any document related to the insurance cover to the account holder. The deceased was a customer of the bank and it was for the bank to establish that when it dispatched the debit card to its customer, both the covering letter as well as the debit card usage guide had been furnished to the deceased. The bank remained away from the proceedings. The insurer could not possibly have adduced any evidence in regard to whether the debit card usage guide had been actually furnished to the deceased account holder.

The insurance cover was governed by a policy between the first and the second respondents. The terms of the insurance cover had to be specifically communicated to the account holder. The account holder had to be put on notice that the insurance cover would become available only after a transaction took place of the nature spelt out in the special conditions of the insurance policy. Insistence on communication to the account holder is necessary because the policy was issued to the bank by the insurer. The account holders are beneficiaries of the policy.

The Supreme Court held that under all conditions, policy details would have to be communicated to the policy holder (or in this case the beneficiary because of the special conditions).

It should also be noted that the NCDRC had denied the claim on the ground that the forwarding letter (which the insurer claimed had been sent by the bank) referred to the usage guide and if the guide had not been furnished, the deceased account holder would in the ordinary course of human conduct have written to the bank complaining that usage guide had not been made available.


Comments

  1. Anonymous6 May 2022 at 22:27

    what i mention here doesn't have any link to the above article but emanates from it . Most of the home appliance and other electrical goods companies have given after sales service to third parties . what is covered in the after sales service is never mentioned clearly when we buy warranties and extended warranties from these third parties and most of us are taken for a ride. It should be made mandatory for these companies to have a website and mention their policies on after sales services.

    ReplyDelete

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