The NCDRC (National Consumer Disputes Redressal Commission) has pulled up insurance companies for keeping terms and conditions unclear in case of murder while directing the company in the instant case to stop this unfair trade practice in case of murder immediately. The Commission has stated that murder should be taken as accidental death for an insured customer in case this has not been the result of any deliberate act of the customer himself/herself. The individual taking personal accident shield insurance for safeguarding himself/herself against any accidental injuries or death will naturally have no deliberate action that led to the murder.
Death has resulted due to an accident and murder has not been excluded in the policy per se. In the case, the death has been accidental and is thus covered under the terms of the policy as per the bench spearheaded by SM Kantikar, the presiding member and member Dinesh Singh. This case pertains to Balram Mulchandani, a Thane resident who had bought personal accident shield insurance from M/s Royal Sundaram Alliance Insurance Co. Limited for 05-11-2008 to 04-11-2009 for Rs. 20 lakh as the assured sum. The policy was being renewed periodically and on the 21st of January, 2009, he had gone to office but did not come back home. The missing person complaint was filed by his family and a few persons were arrested who had murdered Balram, the customer, owing to a property dispute.
The death claim was filed with the insurance company by his son Pawan Mulchandani. However, this was rejected on the grounds that death was not due to any accident but resulted from murder simplicitor. Pawan then reached out to the Maharashtra State Consumer Disputes Redressal Commission. The body directed the company to pay up Rs. 20 lakh in tandem with costs of Rs. 25, 000 and interest of 9%. The Commission has also directed the company to pay Rs. 4 lakh as compensation to the family for service deficiencies and harassment resulting from the insurance company’s unfair trade practices.
Earlier, the company had challenged the decision with the NCDRC, showing the judgment of the apex court taken in the Rita Devi vs. New India Assurance Co. Ltd case where it was observed that It is not as if every case of murder would be an accident. The murder could be accidental, depending on the situation and facts for each case. In case the intention of the act of felony is to murder any individual then this is not accidental murder but instead murder simplicitor which does not get coverage under the policy. The complainant also stated that the company had rejected the claim wrongfully, showcasing the judgment taken by NCDRC in the Maya Devi vs. LIC of India case where the insured individual was killed post an issue with a shopkeeper.
The commission had quoted from Halsbury’s Law of England while defining an accident, stating that even wilful murder may be accidental as far as the victim is concerned for the Maya Devi case. The commission had also stated that if the immediate cause of the injury is the deliberate and wilful act of the insured himself, there would seem to be no accident, and no claim will lie under the policy, at any rate if the insured is not mentally disordered at the time of his act.
The commission finally took reference from Nisbet vs. Rayne and Burn after hearing both parties, where it was observed that murder was actually an accident from the standpoint of the individual who died. The commission also stated that murder was not excluded from the clauses of the policy and the State Commission order was upheld as a result. It also directed that Contra Proferentem Rule applied to policies and interpretation should be in favour of the person insured in case of any ambiguities in the policy. The claim will not be payable only if there is intentional self-injury, attempted suicide or suicide or in case of rebellion, war, insurrection, revolution, military/usurped power, mutiny and so on.
The Taj Devi vs. National Insurance Company Ltd & Ors. case was also taken as reference by the commission where it was stated that murder of the life assured under the policy was not excluded under the terms and conditions. This was upheld in spite of being challenged in the Supreme Court. The Commission has now asked for these unfair trade practices to be discontinued immediately. In case murder is excluded, it should be explicitly mentioned in the list of exceptions. This should also be conveyed to customers when they purchase policies. A report-in-compliance now has to be filed by the insurance company’s chief executive within three months with the commission.