Consumer Commission Orders LIC to Pay Rs 2 Lakh to Widow in Landmark Decision

The South Mumbai District Consumer Commission has directed LIC to pay a Rs 2 lakh claim to the widow of an illiterate policyholder. The commission found that the policy terms were not explained in a language the insured understood, making the repudiation of the claim arbitrary.

In a significant ruling, the South Mumbai District Consumer Disputes Redressal Commission has mandated the Life Insurance Corporation of India (LIC) to pay Rs 2 lakh to the widow of an illiterate policyholder.

The commission highlighted that guidelines from the Insurance Regulatory and Development Authority (IRDA) stipulate that all terms must be clearly explained in a language understood by the insured before signing. Evidence showed that the deceased, who had limited education, could not have comprehended the policy's terms.

The commission concluded that the insurer's rejection of the claim, citing nondisclosure of health issues, was unfounded and arbitrary. The widow's claim was deemed justified, and LIC was ordered to compensate her with an additional Rs 1 lakh for mental agony and Rs 20,000 for litigation costs.

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