Rejecting Accident Insurance Claim Despite 75% Disability Is Deficiency In Service: Thrissur Consumer Commission Directs IFFCO Tokio To Pay ₹15 Lakh
Pranav B Prem
The Consumer Disputes Redressal Commission, Thrissur has held IFFCO Tokio General Insurance Co. Ltd. liable for deficiency in service for wrongfully repudiating a personal accident insurance claim despite the insured suffering severe disability following a road accident. The Bench comprising C.T. Sabu (President), Sreeja S. (Member), and Ram Mohan R. (Member) observed that arbitrary rejection of a legitimate insurance claim on unexplained grounds defeats the very purpose of accident insurance and amounts to unfair trade practice.
The complaint was filed by Thomas, a resident of Thrissur, against the Branch Manager and the insurer, IFFCO Tokio General Insurance Co. Ltd. The complainant had purchased an electric scooter and, at the time of purchase, obtained an insurance policy issued by the insurer. The policy covered the period from 22 November 2019 to 21 November 2024 and provided a capital sum insured of ₹15,00,000 under the personal accident cover for the owner-driver of the vehicle.
On 19 September 2020, while riding the insured scooter, the complainant met with an accident and was initially taken to the General Hospital, Thrissur. He was later admitted to the Neurosurgery Department of Aswini Hospital, Thrissur, where he was diagnosed with quadriplegia, a condition resulting in paralysis affecting the trunk, arms and legs due to spinal cord injury. The complainant also suffered multiple injuries including cervical spine injury with fracture at C6 and C7 spinous process, laminar fracture, chest injuries with rib fractures, and other associated injuries.
The complainant underwent treatment at Aswini Hospital from 19 September 2020 to 2 October 2020, incurring medical expenses amounting to ₹86,445. Following the accident, he remained bedridden and was completely dependent on others even for basic needs. The accident was also reported to the police, and the complainant subsequently lodged a claim with the insurer under the personal accident cover of the policy.
At the instance of the insurer, the complainant appeared before a Medical Board, which issued a certificate dated 6 July 2021 stating that he had suffered 75% permanent physical impairment due to traumatic quadriparesis affecting the cervical spine. Despite the submission of this medical certificate and other supporting documents, the insurer repudiated the claim through a letter dated 21 June 2021 on the ground that the claim did not fall within the scope of the personal accident cover under the policy.
Aggrieved by the repudiation of the claim, the complainant approached the Consumer Commission alleging deficiency in service and unfair trade practice on the part of the insurer. He sought payment of the insured amount along with compensation for the hardship and financial loss suffered due to the denial of the claim.
The insurer, in its written version, admitted the existence of the insurance policy but contended that its liability was subject to the terms and conditions of the policy. It argued that the claim made by the complainant did not fall within the scope of the personal accident section of the policy and that the repudiation of the claim was therefore justified.
After examining the evidence and documents placed on record, the Commission noted that the insurer did not dispute the policy, the occurrence of the accident, or the disability suffered by the complainant as assessed by the Medical Board. The Commission also observed that the insurer failed to provide any cogent explanation as to how the complainant’s claim did not fall within the scope of the personal accident cover.
The Commission observed that a plain reading of the policy would indicate that compensation was payable in cases of permanent total disablement resulting from accidental injury. It further noted that the Medical Board had assessed the complainant’s disability at 75% permanent physical impairment, which in practical terms resulted in complete functional disability.
The Commission emphasised that while assessing accident insurance claims, the functional disability of the insured must be considered. It observed that “affirmation of 75% physical impairment or mental disability… evidences the fact that the complainant battles 100% functional disability.” The Commission further noted that an insurer dealing regularly with insurance matters could not claim ignorance of the fact that such spinal injuries would lead to complete functional incapacity.
Finding the repudiation of the claim unjustified, the Commission held that the insurer had rejected the claim without proper reasoning or logical application of mind. The Commission observed that such “blind denial based on unfounded and unexplained reasons” renders the repudiation legally unsustainable.
The Commission also strongly criticised the conduct of the insurer, observing that accident insurance policies are purchased by ordinary individuals as protection against unforeseen calamities and not as a means for insurers to evade liability. It remarked that denial of legitimate claims on illogical grounds undermines consumer confidence and reduces accident insurance to an empty promise.
Holding the repudiation of the claim to be unlawful, the Consumer Disputes Redressal Commission, Thrissur allowed the complaint and directed the insurer to pay the insured sum of ₹15,00,000 to the complainant. In addition, the Commission awarded ₹5,00,000 as compensation for the agony, hardship and financial loss suffered by the complainant, along with ₹10,000 towards litigation costs. The Commission further directed that the amounts shall carry interest at the rate of 9% per annum from the date of filing of the complaint until realisation, and the insurer was directed to comply with the order within 45 days from receipt of the order.
Cause Title: Thomas vs Branch Manager, IFFCO
Case Number: CC/492/21
Coram: C.T. Sabu (President), Sreeja S. (Member), and Ram Mohan R. (Member)
