Insurance Policies Must Be Read Holistically: NCDRC Holds LIC Liable For Deficiency In Service

The National Consumer Disputes Redressal Commission, held that insurance policies should be read inclusively to meet the reasonable expectations of the insured. The case revolves around the deceased complainant's son who had a life insurance policy from Life Insurance Corporation. According to the policy, it was promised that a sum assured of ₹8,00,000 on death. After the death, the complainant was a nominee and claimed for the insured amount, but the insurer did not respond. The complainant then approached the District Forum, which allowed the complaint and ordered the insurer to pay a sum of Rs. 8,00,000 along with interest. Insurer did not agreed with the decision and appealed before the State Commission of Chandigarh. The State Commission dismissed the appeal which, in turn, led the insurer to file a revision petition before the National Commission. The insurer contended that the order is illegal and against evidence. It said that the premium was not paid, and the policy had lapsed before the death of the policyholder, so no amount was payable. It was submitted that the policyholder defaulted within the grace period; hence, the policy lapsed. The National Commission observed after examining the insurance policy clauses concluded that the grace period began on 21.01.2015 and ended on 06.02.2015, not 24.01.2015 as claimed by the insurance company. The Commission held that insurance policies must be interpreted holistically to meet the reasonable expectations of the insured and beneficiaries. The Commission held that the coverage clauses should be read broadly and exclusions, narrowly. The State Commission's order was found to be well-reasoned with no illegality or jurisdictional error. The order was upheld, and the revision petition was dismissed. Published by **Voxya** as an initiative to help consumers in resolving consumer complaints.