The District Consumer Disputes Redressal Commission in Aligarh, Uttar Pradesh, has directed the State Bank of India (SBI) to pay Rs 2 lakh to the mother of an accident victim after finding that the bank failed to deduct the premium required to renew his insurance policy despite sufficient money being available in his account.
In its October 9 order, the commission, comprising President Hasnain Qureshi and member Purnima Singh Rajpoot, held the bank responsible for deficiency in service. Apart from the insurance amount, SBI was directed to pay Rs 5,000 for harassment and another Rs 5,000 towards litigation expenses.
The commission found that the bank was required to deduct an annual premium of Rs 100 and transfer it to the insurer for continuation of the accident insurance cover. Its failure to fulfil this obligation resulted in the policy not being renewed.
Account Had Sufficient Funds for Premium Deduction
The dispute arose after the complainant’s son, who had opened an SBI account in 2014, enrolled in an accident insurance scheme offering coverage of Rs 2 lakh against an annual premium of Rs 100.
While the bank deducted the premium for the first year, it did not collect the amount for the subsequent policy period covering October 18, 2015, to October 17, 2016.
The account holder died in a road accident on January 11, 2016. His mother, who was nominated as the beneficiary under the insurance policy, subsequently approached the insurer for payment of the insured amount.
However, the insurance company disputed liability, maintaining that it had not received the renewal premium and had not issued any policy providing coverage on the date of the accident.
The mother approached the consumer commission, seeking Rs 2 lakh towards the insurance claim, Rs 50,000 for harassment and Rs 10,000 as litigation costs.
Despite receiving notice of the proceedings, SBI did not submit a written response.
Commission Finds Negligence in Bank’s Failure to Deduct Premium
After examining the account records, the commission found that the deceased had deposited Rs 500 on October 15, 2015. His account continued to maintain a balance exceeding Rs 100 until November 22, 2015.
The commission concluded that SBI had sufficient opportunity to debit the renewal premium and remit it to the insurance company.
It observed that the bank was obliged to transfer the Rs 100 premium on October 18, 2015, or within the following month. Failure to do so constituted negligence and deficiency in service.
The commission held that the bank could not avoid responsibility for its failure to process the renewal premium when adequate funds were available in the customer’s account.
SBI Directed to Pay Insurance Amount and Compensation
Holding the complainant entitled to the insurance amount, the commission ordered SBI to pay Rs 2 lakh towards the claim.
It also awarded Rs 5,000 for harassment and Rs 5,000 towards litigation expenses, bringing the total amount payable by the bank to Rs 2.10 lakh.
The ruling places responsibility on the bank for the unpaid insurance claim because it failed to deduct and remit the renewal premium despite the availability of sufficient funds in the policyholder’s account.
