Death due to COVID-19: State Consumer Commission Remands Insurance Claim Case, Citing Need to Determine if Pandemic Death is 'Accidental' - 2025-01-30

State Consumer Commission Remands COVID-19 Death Insurance Claim, Cites Ambiguity

Jaipur, Rajasthan – The State Consumer Disputes Redressal Commission has set aside a District Commission's order directing an insurance company to pay a claim, remanding the case for a fresh hearing. The Commission, comprising Justice Devendra Kachhawaha (President) and Mr. Ramphool Gurjar (Member), highlighted critical unresolved questions, including whether a death due to the COVID-19 pandemic constitutes an "accidental death" for insurance purposes and the non-joinder of necessary parties.

The appeal was filed by Premerica Life Insurance Limited against a Bhilwara District Consumer Commission order that had directed it to pay ₹3,60,702 to the son of a deceased loanee.

Background of the Case

The complainant, Hardeep Kalra, stated that his late father had taken a personal loan of ₹4,00,000 from Aadhar Housing Finance Ltd. A premium of ₹39,298 was deducted from the loan for a loan protection and personal accident insurance policy with Premerica Life Insurance.

Following his father's death due to COVID-19 on May 2, 2021, Mr. Kalra filed a claim. When the finance company refused to release the property documents and the insurance company did not settle the claim, he approached the District Consumer Commission. The District Commission ruled in his favour, ordering the insurance company to pay the claim amount after deducting the premium, along with interest and compensation.

Arguments of the Parties

• Premerica Life Insurance (Appellant): The insurer argued that no valid insurance contract ever existed. They claimed the deceased was repeatedly asked to undergo a medical examination but failed to comply. Consequently, the insurance proposal was declined on October 12, 2020, and the premium of ₹39,298 was refunded to the finance company (the master policyholder) on October 15, 2020, well before the deceased's death. They also contended that they only offer life insurance, not the personal accident cover under which the claim was awarded. They suggested that the personal accident policy might have been with another insurer, "DHLI," who was not made a party to the case.

• Hardeep Kalra (Respondent/Complainant): The complainant's counsel argued that his father was never informed about the requirement for a medical check-up or the refund of the premium. They presented a letter from the finance company dated March 9, 2021, which mentioned policy numbers, suggesting a valid policy was in place. They maintained that the insurance company was liable for deficiency in service.

• Aadhar Housing Finance (Respondent/Opposite Party): The finance company, which did not file a reply at the District level, argued before the State Commission that the personal accident insurance was provided by DHLI and that the deceased's death was due to COVID-19, not an accident.

Commission's Observations and Decision

The State Commission noted significant contradictions and unresolved issues in the District Commission's order. It pointed out that while the lower forum found the premium was never refunded to the proposer, its final order directed the insurer to pay the claim amount after deducting the refunded premium .

The Commission identified several crucial points that required re-examination:

1. Nature of Death: The court raised a pivotal legal question: "It is necessary to determine whether the death of the loanee due to the COVID-19 pandemic will be considered a normal death or an accidental death." The Commission opined that an accidental death is not limited to road accidents but can include any sudden, unforeseen event.

2. Necessary Parties: The Commission held that the bank and the other alleged insurer, "DHLI," were necessary parties to clarify which company provided the personal accident cover. It criticized the complainant for not impleading them.

3. Communication Gap: The Commission observed that there was no documentary evidence to prove that the letters regarding the medical check-up or the rejection of the proposal were ever received by the deceased. The refund was made to the finance company, not the proposer.

Citing these ambiguities, the Commission ruled that a fresh hearing was necessary for a just decision. It stated, "In our humble opinion, this appeal by the insurance company is partially allowed, the impugned decision is set aside, and the matter is remanded to the learned District Consumer Commission."

The Commission has directed the complainant to file an amended complaint, impleading the bank and DHLI as parties. The case will now be re-heard by the Bhilwara District Commission to determine the facts and liability after considering evidence from all relevant parties.