TATA AIG Insurance ordered by consumer forum to compensate Hyderabad resident with Rs 1 lakh

HYDERABAD: The District Consumer Disputes Redressal Commission has directed the TATA AIG Insurance Company Ltd to compensate a Hyderabad resident with Rs. one lakh for service deficiency and unfair trade practices.

The case involves a complaint by a Hyderabad resident Suddala Sujatha, whose late husband Doddana Gowd Suddula obtained a housing loan of Rs. 1,39,20,439 from PNB Housing Finance Ltd for their house situated in Moosarambagh, Malakpet. He also obtained an insurance policy from TATA AIG Insurance Company Ltd to cover the loan.

The complaint arose when the insured individual, Suddala Sujatha's husband, passed away due to cardiac arrest while undergoing treatment for severe illness at Virinchi Hospital. She submitted a claim to the insurer, but it was rejected, citing that the cause of death was not covered under the policy.

Suddala Sujatha even argued that accidental death was covered, and the rejection caused financial loss and emotional distress. In response, the insurer denied any liability and claimed lack of knowledge regarding the policy's terms and the repudiation of the claim. They requested the dismissal of the complaint and sought exemplary costs.

In their written response, opposite party No. 2 TATA AIG Insurance Company Ltd refuted the allegations, asserting that upon reviewing the claim documents, they found the cause of death fell outside the policy's coverage, as it was due to a sickness ailment rather than an accident. They argued that the policy's terms, conditions, and limitations were adhered to, and the claim was rightfully rejected. TATA AIG Insurance Company Ltd denied any deficiency of service or unfair trade practice and requested the dismissal of the complaint.

PNB Housing Finance Ltd claimed that insurance coverage was obtained by the borrowers for a housing loan, with the bank having no detailed knowledge of the policy's terms. TATA AIG Insurance Company Ltd rejected the claim, stating the death was due to sickness, not an accident covered by the policy.

The court noted that even the policy documents were provided to Suddala Sujatha only after her husband's death, and no evidence showed that the policy was given to the policyholder.

The commission found that the denial of the claim was unjustified, as the policy covered accidental death, and the insurer's refusal constituted deficiency of service and unfair trade practice. The bank, as the master policyholder, was also faulted for insisting on loan repayment without pursuing the insurance claim.

The bank's insistence on loan repayment without following up with the insurer also constituted deficiency of service and unfair trade practice. As a result, the commission directed insurer TATA AIG Insurance Company Ltd and the bank PNB Housing Finance Ltd to pay the outstanding loan amount.

The court further directed only Tata AIG Insurance Company Ltd. to pay Rs. 1,00,000 in compensation and Rs. 25,000 in litigation costs to Suddala Sujatha.