Holding that ambiguity in an insurance policy cannot be used to deny legitimate claims, the national consumer disputes redressal commission (NCDRC) has directed Liberty Videocon General Insurance Company Ltd to pay the full ₹5 lakh personal accident insurance amount to the widow of a deceased joint bank accoun-holder.
The commission ruled that where a group insurance policy is silent on the coverage of joint account-holders, payment of a single premium covers both account-holders. An insurer, therefore, cannot deny a claim merely because the deceased was the secondary account-holder or because his name was absent from the bank's internal records.
In an order issued last week, the NCDRC Bench of Dr Inder Jit Singh (presiding member) and Shashi Nandkeolyar (member) said: "......in the absence of any specific exclusion clause, or clear details with respect to the coverage of joint account-holders, we are of the considered view that payment of a single premium under the policy will cover both the account-holders in case of joint account-holders. Further, we hold that the total sum insured being ₹5 lakh, in case of the death of one of the joint account-holders only, the full amount of the sum insured of ₹5 lakh is payable and not half of the amount, as has been held by the Chhattisgarh state consumer disputes redressal commission. Of course, with the payment of full sum insured of ₹5 lakh, the further liability of the insurance company towards the surviving account-holder for any mishap in future in the remaining period of the policy will end, unless such a policy is renewed or a fresh policy is taken with payment of additional or fresh premium and fresh coverage of the surviving account-holder is obtained."
Rejecting the state commission's interpretation that only half the sum insured was payable in the event of the death of a joint account-holder, NCDRC held that the durg district consumer disputes redressal commission was justified in directing the insurer to pay the full insured amount of ₹5 lakh.
Bhilai-based Meena Bai Chelik and her husband, Shankar Lal Chelik, held a joint savings account with Jila Sahakari Kendriya Bank. A premium was periodically deducted from the account under a group personal accident insurance policy issued by Liberty Videocon General Insurance, providing accident cover of ₹5 lakh.
In September 2014, Mr Chelik suffered fatal head injuries after collapsing at his workplace and died during treatment. However, the insurer rejected the claim, contending that he was only the secondary holder of the joint account and that the premium had been paid only for the primary account-holder.
The district consumer commission allowed the complaint and directed the insurer to pay the insured amount. On appeal, the Chhattisgarh state consumer disputes redressal commission partly allowed the insurer's appeal, holding that since the account was jointly held, only ₹2.5 lakh, being half the insured amount, was payable. Both Meena Bai Chelik and Liberty Videocon General Insurance challenged that order before the NCDRC.
Before NCDRC, the insurer argued that only one premium of ₹65 had been paid, which covered only the primary account-holder. It relied on Jila Sahakari Kendriya Bank's records showing that Mr Chelik had not been enrolled under the group policy and contended that no insurance risk could be assumed without receipt of premium for the deceased.
The insurer also argued that insurance contracts must be interpreted strictly in accordance with their terms.
Ms Chelik contended that the policy nowhere stated that the insurance amount would be divided between joint account-holders or that separate premiums were required for each holder.
She argued that both account-holders had paid the premium through the joint account and that neither the insurer nor the bank had disclosed any policy condition excluding the secondary account-holder.
After examining the policy, NCDRC noted that the insurer admitted during the hearing that the policy was completely silent on coverage for joint account-holders.
It observed that neither the policy nor its terms clarified whether two premiums were necessary for a joint account or whether the insured amount would be shared between account-holders.
Relying on the Supreme Court's judgement in Canara Bank vs United India Insurance Co Ltd (2020), NCDRC held that insurance policies must be interpreted holistically, giving effect to the reasonable expectations of insured persons and beneficiaries, with ambiguities resolved in favour of the insured.
"The spirit behind the scheme is to cover the account-holders of the bank," the Commission observed.
It ruled that, in the absence of any specific exclusion clause or clear provision regarding joint account-holders, payment of a single premium under the policy covers both account-holders. It further held that if one of the joint account-holders dies during the policy period, the entire sum insured of ₹5 lakh becomes payable, and not merely half the amount as held by the state commission.
However, once the full insured amount is paid following the death of one joint account-holder, the insurer's liability towards the surviving account-holder under that policy ceases unless fresh coverage is obtained by paying a fresh premium.
Rejecting the insurer's contention that the deceased's name did not appear in the bank's records submitted for insurance coverage, the Commission held that account-holders have no access to the internal records maintained between the bank and the insurer. They are entitled to assume they are covered under the policy once the premium has been deducted from their account.
The commission held that the bank's failure to maintain internal records could not be used to deny insurance benefits to consumers.
Dismissing the insurer's revision petition, NCDRC held that the absence of the deceased joint account-holder's name from the bank's records could not be a ground to deny the insurance claim. It reiterated that payment of a single premium in a joint account entitles both account-holders to insurance coverage up to the maximum insured amount of ₹5 lakh.
(Revision Petition Nos. 894 and 1095 of 2017; Order dated 21 July 2026.)
