New Delhi: The lapsed insurance policy
cannot be revived as a matter of right on acceptance of the
premium without the policy-holder receiving the approval of
revival from the insurance company, the apex consumer body has
"Simply acceptance of premium and its retention by the
insurance company did not ipso facto render the policy revived
in the absence of acceptance of revival to insured by it," the
National Consumer Disputes Redressal Commission said in a
It said lapsed policy could not be revived simply by
fulfilling the conditions and communication regarding revival
to the assured is necessary.
"It is now well acknowledged and crystallised by
catena of decisions that revival of lapsed insurance policy
was not a matter of right and it would not automatically
follow even after fulfilment of conditions laid down in the
policy," the Commission comprising members B N P Singh and S K
The Commission passed the order on a plea of the Life
Insurance Corporation of India (LIC) challenging the Delhi
Consumer Commission`s direction to pay a policy holder`s wife
Rs one lakh with 12 per cent interest.
The LIC contended the policy of the deceased stood
lapsed on the date of his death and the premium due was
received after he was expired.
"There has been no evidence suggesting acceptance of
premium and communicating to the assured (Garg) revival of
policy by the insurance company," the Commission said.
The Commission said the revival (of the lapsed policy)
operates as a new contract and the rights and liabilities
begin to run until new terms and conditions are accepted and
The deceased, Yogendra Garg, had taken an insurance
policy from LIC in 1989 but it lapsed after he failed to pay
the premium to the company on time.
Garg met with an accident and before his death, he
dispatched the premium with late fees to the company.
The insurance company rejected the claim of Garg`s
wife Asha on the ground that the policy-holder expired before
the revival of the policy and thus the liability of the
company to pay claim had ceased.
"Since Garg died before actual revival of the policy,
there was in fact no revival," the Commission said.
The Commission, however, directed LIC to pay half of
the assured value to Asha taking into account the long 18
years that have elapsed since death of Garg.