Non- communication of terms and conditions of insurance policy amounts to deficiency in service

The NCDRC agreed with the conclusions of both the District forum and the State Commission that the terms and conditions, based upon which, the insurance claim had been repudiated, were never brought to the knowledge of the complainant which amounted to deficiency in service on part of the bank and the insurance company.

The NCDRC was faced with the above facts in the case of Bajaj Allianz General Insurance Company Limited Vs. Dr. Pallavi Paawan Save, Review Application No. 20 Of 2017 wherein the Complainant’s claim under a Personal Accident policy was denied on account of non-maintenance of a certain minimum average quarterly in the bank account which allegedly invalidated the policy.


The husband of the complainant/respondent No.1had availed of a Gold Debit Card facility by Axis Bank (OP No. 1) under which, he was holder of a Personal Accident Policy of Rs. 5 lakhs. On the death of the Complainant’s husband, she informed the OP No. 1 about the accident and claimed the insurance amount. However, her request was turned down by O.P. No. 1 stating that a prerequisite to keep the personal accident insurance cover activated was that the policy holder should have made a purchase transaction in 365 days prior to the day of death and additionally should have maintained an average quarterly balance of Rs.2,500/- in the two quarters before the date of the incident. O.P. No. 1 further stated that in the present case the account in question was not having the required average quarterly thereby invalidating the policy.

It was contended by the Complainant that the terms and conditions governing the policy had never been given by the Bank, or the insurance company to the insured/deceased.


The District Forum concluded that it was incumbent upon the OP No.1 Bank to make the terms and conditions clear to the complainant at the time of opening the account or sending the debit card.  Moreover, a perusal of the statement in the Welcome Kit, enclosed with the Gold Debit Card, indicated that the Bank never informed the complaint to keep the minimum average quarterly balance. They also stated that both the respondents were guilty of deficiency in service, but the District Forum ordered only the Insurance Company to pay a sum of Rs.5 lakh to the complainant towards the personal accident insurance claim of her husband and also a sum of Rs. 5,000/- as compensation for mental agony etc. and Rs.3,000/- as cost of litigation.

The NCDRC agreed with the decision of the consumer fora below which held the Bank responsible for not conveying the terms and conditions of the Insurance Policy to the complainant account holder.  However, the NCDRC differed in opinion on the issue of imposition of liability only upon the petitioner Insurance Company while the Bank was totally exonerated.  Therefore the orders passed by the State Commission as well as the District Forum were held to be perverse in the eyes of law and hence unsustainable.