No inherent right for revival of lapsed policy: Natl Comm
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Last Updated: Thursday, September 03, 2009, 19:26
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 held.

"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 recent decision.

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 Naik said.

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 complied with.

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.

Bureau Report

First Published: Thursday, September 03, 2009, 19:26

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