Consumer dispute Insurance Lawyer: Insurance of loan amount; if premium is not sent to insurance company by the finance company, meanwhile the insured dies, the claim cannot be repudiated.

Supreme Court of India

Justice Indu Malhotra

If the loan is insured and the premium has been given to the finance company, who had failed to transfer the same to the insurance company on time, before which the insured has died, then, in that case the Insurance claim cannot be repudiated on the ground that the premium was not received by the insurance company, and as the premium was not received therefore the cover of insurance has not started.

The fault of the finance company to transfer the insurance installment on time to the insurance company cannot result in denying of the claim of the insured, who had paid the first premium and died after paying that. The date of commencement of cover of the insurance policy for loan would be, the date on which the premium was given to the finance company by the insured, not that date on which the finance company has given the amount of insurance premium to the insurance company, by which date the insured had already died.

The the supreme court in Civil Appeal number 3962 of 2019 was concerned with the aforesaid issue and set aside the findings of national commission which had dismissed the complaint of the consumer and had repudiated the claim of the consumer deceased husband as the premium was not received by the insurance company before the death of insured.

The supreme court held that the date of payment of premium by the deceased husband of the appellant shall be the date of start of insurance policy and covering of risk, therefore, the appellant is not liable to pay installment of loan amount. The loan was secured from the date on which insurance premium was paid to the finance company.

In the present case the National Commission had set aside concurrent findings of the two forums below and had dismissed the complaint of the appellant. The supreme court while setting aside the said judgement had allowed the complaint of the complainant.