A district consumer commission in Andhra Pradesh has ordered an insurance company to release Rs 1 crore to the widow of a stone polishing unit owner, holding that an accidental death claim cannot be denied on unverified claims of income suppression.
The Kurnool District Consumer Disputes Redressal Commission ruled that the insurer failed to substantiate allegations that the policyholder had deliberately inflated his financial earnings when purchasing the policy. The bench, comprising President Karanam Kishore Kumar and members N Narayana Reddy and S Nazima Kausar, concluded that repudiating the claim constituted a deficiency in service. The forum ordered the company to disburse the Rs 1 crore sum assured along with Rs 25,000 for mental agony and Rs 10,000 toward litigation expenses within 45 days.
Insurer Claimed Intentional Misrepresentation
The dispute stems from the insurer’s formal rejection of the claim in an October 23, 2025 repudiation letter. The firm alleged that the deceased businessman had suppressed his actual income during the proposal stage to secure high-value coverage.
To defend its decision, the insurer relied on an internal investigation report, bank records, an alleged declaration from the widow, and purported statements from the deceased’s son suggesting that his father’s income had been artificially inflated. The company contended that policy stipulations permitted complete repudiation in instances involving fraudulent or inaccurate statements.
Representing the widow, advocate Siv Sudarsha argued before the bench that the allegations were entirely unfounded. The counsel stated that the deceased, who had operated a stone enterprise for a decade and owned a polishing factory, agricultural land, and lorries, possessed ample financial means to pay the policy premiums.
Forum Rejects Internal Inquiry as Conclusive Proof
In its August 28 ruling, the commission determined that an insurer’s internal investigation report merely reflects an investigator’s subjective findings and cannot be accepted as conclusive legal proof of fraud or deliberate misrepresentation.
Addressing the alleged statement attributed to the policyholder’s son, the bench observed that the insurance firm, represented by advocate Palle Niranjan Kumar, failed to demonstrate that the remarks constituted an unequivocal admission of deceit. The commission added that even if such remarks had been made, they could not establish the policyholder’s subjective intentions when he completed the original proposal document.
The forum noted that the insurer had thoroughly evaluated the proposal, accepted the premium, and assumed the contractual risk. Having done so, the company was legally required to present concrete statutory or contractual justification for denying benefits rather than relying on unproven allegations.
Fatal Crash Occurred During Active Policy Period
The coverage commenced on March 13, 2024, and was scheduled to remain active through March 11, 2027. Under the agreement, the nominee was entitled to the base sum assured alongside accidental death benefits.
On July 28, 2025, at approximately 8:45 pm, the policyholder sustained critical head and leg injuries while travelling in a mini truck. He was transported to a government hospital, where attending doctors declared him dead.
Because the policy was active at the time of the fatal crash and the fact of accidental death was undisputed, the commission held that the surviving nominee is fully entitled to the policy payout.
