Irked at insurance companies’ customary practice of rejecting insurance claims on some ground or the other, the State Commission has further warned them to treat the order as a “wake-up call” and henceforth not make consumers “run from pillar to post” seeking settlement of their insurance claims.

The ruling came after the Life Insurance Corporation of India refused to compensate a Delhi Police constable for a physical disability. Constable Neeraj Kumar’s right arm had to be amputated in 2008 after he received an electric shock. Kumar had two LIC policies covering permanent disability at the time amounting to over Rs 1.5 lakh, and filed a claim for the policy benefits. The LIC, however, refused to settle his claim saying that Kumar’s disability was not “permanent” as he was still capable of earning wages.

The company further claimed that since Kumar’s left arm was intact and as he had been permitted to continue his service in the Delhi Police on “compassionate grounds”, he could “still keep his family alive”.

The argument failed to find favour with the State Commission, which ruled that a person with total disability couldn’t be denied benefits of the insurance policy on the ground of being employed.

“Had the respondent applied for the post of constable with one hand, we are sure he would not have got the job. Therefore, to reject such a claim on the premise that he is sufficiently able to work or earn wages is nothing but irrational and shows the inadmissible oppressive interpretation of a beneficial contract,” said Commission president Justice J D Kapoor.

‘The provisions of any beneficial contract should receive beneficial interpretation. If there are two or more interpretations of any term of contract, like an insurance contract, the interpretation that goes in the favour of the consumer should be acted upon and accepted,” ruled Justice Kapoor, upholding a previous order by the District Forum that directed the LIC to provide all permanent disability benefits under the policies with incurred interest. It further directed the company to pay Rs 13,000 as compensation to Kumar.