Insurance claim– Cannot be denied on the ground that no premium had been paid – Notice to insured before the policy lapses, must be issued. [Insurance Act (4 of 1938)]

Jammu
and Kashmir Bank Ltd., Jammu vs. Tania Jamwal and Others. AIR 2016 JAMMU AND
KASHMIR 114

The
Claimants-respondents  had an insurance
policy named, “jeevan  Saral Policy”. As
per the arrangement/ authorisation of the deceased policy holder, the premium
amount was to be debited by the insurance company from the account of the
deceased policy holder through electronic clearing system, provided there were
sufficient funds in the bank account, which was being maintained by j & K
Bank ltd.  This was an inter-se
arrangement between the Policy holder’s bank and the insurance company.

The
deceased policy holder passed away and the claimants claimed the amount of
insurance policy. the insurance company 
rejected the claim on the ground that the policy had already lapsed due
to non-payment of premium.

The
high Court held that if for any reason the amount in question could not be
debited in time, it was the sole duty of the insurance company to appraise the
deceased policy holder. But in the present case, the insurance company did not
bring it to the notice of the deceased policy holder, moreover, the bank, while
rejecting the requisition of the insurance 
company  mentioned  “miscellaneous”  in  its
reasons memo as a result of which the insurance company suffered a confusion.
if there was any procedural lapse/ wrong, the same was between the insurance
company and  the  bank 
for  which  the 
policy  holder  cannot 
be held responsible.