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Raj Kumar Makkad (Adv P & H High Court Chandigarh)     17 January 2010

liable for deficiency in service for insurance poli

Assignee of a policy holder would be liable for deficiency in service if an insurance policy lapsed as a result of non-payment of premium in time, the National Consumer Commission has held. The apex consumer body held the Employment Provident Fund Commissioner (EPFC) responsible for deficient service for failing to deposit the premium of a policy holder to the LIC in time, which led to repudiation of claim by the company.

“When the liability was on the EPFC (under statute) to pay the premium in respect of the policy which they had undertaken, being an assignee of the insured, and if they failed to do so, it is they, who would be liable to compensate the insured for deficiency,” theCommission , comprising President Justice Ashok Bhan and Member B K Taimni said. It passed the order on a plea of the LIC seeking to set aside the Karnataka State ConsumerCommission direction to pay Rs one lakh to Mangai, the wife of the deceased, for deficiency in service in not settling the claim.

The said policy was assigned in favour of Employees Provident Fund Scheme and the EPFC was to pay the premiums on behalf of the employees such as the deceased when they became due.


 2 Replies


Good decision. Assignee of Insurtance policy holder will pay in time, he will not manipulate policy holders otherwise he has to pay compensation to the policy holder/holders.

V. VASUDEVAN (LEGAL COUNSEL)     18 January 2010

 Excellent decision. Thanks for this contribution.


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