Insurance cover against loan

While granting personal loans against credit cards to the complainant, the bank issued four insurance certificates, which clearly indicated that the personal accident insurance benefit available to the ‘bearer' of the certificate was of five times of the loan amount. Subsequently, the complainant met with an accident, but the bank did not honour its commitment.

It was observed that the certificates were issued by the bank's credit card division to the credit-card holder. The bank was not transparent while issuing these certificates as it insisted that the cover was available only in case of accident leading to permanent disability as per the definition of personal accident by the insurance company, a sister concern. However, the certificate did not indicate the same.

The ombudsman directed the bank to reimburse Rs 44,442 to the complainant in accordance with the terms of the insurance certificates.

Delay in payment of insurance premium: A complainant had subscribed to the healthcare plus scheme started by a bank with a tie-up with an insurance company. The insurance policy was valid subject to continuous renewal of the policy.

In one year the bank renewed the policy after a lapse of five days from the due date despite the complainant submitting the renewal application form to the bank well in advance. The bank clarified that they could not renew the policy in time due to some technical problem in their system. During June 2009, the complainant fell sick and underwent a surgery. Her claim for reimbursement of medical expenses was rejected by the insurance company stating the reason that the policy was not continuously valid for the previous six months.

As there was clear deficiency of service on the part of the bank in not renewing the insurance policy on the due date and consequently the complainant had to undergo hardship on account of the same, the bank was directed to pay the amount paid by the complainant to the hospital authorities.

Mis-selling of insurance products: The complainant had filed a complaint against a bank for misleading him and selling a private insurance policy to him and debiting his account towards payment of initial premium amount. He denied giving any mandate for debiting his account.

On examination of the complaint it was observed that the complainant was aware of all the facts while taking this policy as seen from the consent given on the application form by the complainant. Further, it was also observed that the complainant had provided the mandate for debiting his account towards the initial payment of premium.

Therefore, the complainant's allegations were not tenable.

(Source: Annual report of the Banking Ombudsman Scheme.)