Insurance claim rejected over ‘undisclosed’ clause, woman wins Rs 2.26 lakh payout

3 min readNew DelhiJul 11, 2026 04:00 PM IST

The complainant had sought the accidental death benefit of Rs 2 lakh. (Image generated using AI)

A consumer commission in Punjab has directed an insurance company to pay Rs 2 lakh under a personal accident insurance policy to the mother of a 21-year-old man who died in a road accident, observing that the denial of a genuine claim based on an undisclosed condition caused avoidable hardship and inconvenience to the complainant.

President Charanjit Singh and members Nidhi Verma and V P S Saini observed that the repudiation of the claim based on a condition which has not been proved to have been supplied or communicated to the insured amounts to deficiency in service and unfair trade practice.

“It is usual with the insurance company to show all types of green pastures to the customer at the time of selling insurance policies, and when it comes to payment of the insurance claim, they invent all sort of excuses to deny the claim,” the order dated June 24 read.

Claim denial

According to the complainant, her son, who maintained a savings account with a bank and held a RuPay platinum debit card, died in a road accident in 2024. She sought the accidental death benefit of Rs 2 lakh available under the card-linked group personal accident insurance policy.

However, the insurer rejected the claim, stating that the deceased had not carried out a RuPay card-induced point-of-sale (POS) or e-commerce transaction within 30 days before the accident. It contended that ATM and UPI transactions did not satisfy the policy requirement and therefore the claim was not payable.

Alleging deficiency in service and unfair trade practice, the complainant moved consumer commission.

The insurance company denied the allegations and said that no ATM transaction were carried out as required under the policy 30 days prior to his death.

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Relief granted

The commission observed that neither the bank nor the insurance company produced any evidence to show that the policy terms containing the exclusion had been supplied or explained to the deceased.

“This Commission is of the considered opinion that where a bank promotes and issues a RuPay Platinum Debit Card carrying accidental insurance coverage and continues to recover annual card charges from the customer, the customer legitimately expects that accidental insurance protection is available during the currency of the card. If there are hidden restrictions curtailing such benefit, the same must be specifically disclosed to the cardholder,” it said.

The commission held that after accepting premium-linked benefits through the banking arrangement and keeping the card active, the opposite parties cannot rely upon undisclosed conditions to deny the claim.

It remarked that the repudiation of a genuine claim on the basis of an undisclosed condition has caused avoidable hardship and inconvenience to the complainant.

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“The complainant has suffered considerable mental agony and harassment. She lost her young son in a tragic road accident and was thereafter compelled to pursue the claim before different authorities and finally before this Commission,” it noted.

The commission therefore directed the insurance company to pay the insured accidental death benefit amount of Rs 2 lakh to the complainant. It further awarded Rs 26,000 on account of harassment, mental agony and litigation costs.

For consumer-related grievances, individuals may contact the consumer helpline in their respective states and union territories (Punjab helpline:0800-22577) or call the National Consumer Helpline at 1915 for assistance.

Ashish Shaji is a Senior Sub-Editor at The Indian Express, where he specializes in legal journalism. Combining a formal education in law with years of editorial experience, Ashish provides authoritative coverage and nuanced analysis of court developments and landmark judicial decisions for a national audience.

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