Insurance Company's Cancellation: A Costly Miscalculation.


29 November 2024 Civil Revision >> Civil & Consumer Law   |   Consumer Law >> Civil & Consumer Law   |   Inadequate payment for insurance claim >> Insurance  

This case of Roopa Devi v/s Tata Aig Life Insurance Co. Ltd., Maharashtra & Another., involved a life insurance policy that was cancelled by the insurance company due to alleged misrepresentation of the policyholder's annual income in the proposal form. The policyholder stated an annual income of Rs. 2 lakhs, but did not provide a detailed breakdown. The insurance company argued this was a material non-disclosure, violating the policy and contract law.

The District Forum ruled in favor of the policyholder, but the State Commission overturned this decision, stating the policy, being tied to share market investments, fell outside consumer protection.


 

 

The National Commission, however, found that the policyholder's statement of Rs. 2 lakhs was not materially false, as her actual income, including rental income, supported this figure. The Commission emphasized that the omission of a detailed breakdown was not a fundamental breach. Furthermore, they applied Section 45 of the Insurance Act, 1938, which limits challenges to policies based on misstatements after three years.

The Commission also rejected the State Commission's reasoning regarding share market investments, stating it was irrelevant to the life insurance policy itself. Consequently, the National Commission reinstated the District Forum's order, deducting the amount already paid by the insurance company. The revision petition was allowed.


Section 45, Insurance Act - 1938  

Life Insurance Corporation Act, 1956  

Consumer Protection Act, 1986  

Section 19, Indian Contract Act - 1872  

Indian Contract Act, 1872