Private Bank Ordered to Pay Rs 36.95 Lakh Compensation for Insurance Issue in Tamil Nadu
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In a significant ruling, the Thoothukudi District Consumer Disputes Redressal Commission has directed a private bank to pay ₹36.95 lakh to a woman whose husband was denied insurance benefits due to the bank’s poor service.
The complaint was originally filed by Lavanya, the wife of Vimal Rajesh Raj, a lawyer from Thoothukudi. Her husband had taken a home loan from the private bank and also paid for a life insurance and health insurance policy as part of the loan package.
However, even after paying the premium, the insurance policy documents were never issued by the bank. Tragically, Vimal Rajesh Raj passed away due to illness. When Lavanya approached the bank to claim the insurance amount and request a loan waiver, the bank failed to respond properly and refused to settle the claim without giving any valid reason.
Left with no option, Lavanya approached the consumer court seeking justice. Despite sending a legal notice to the bank, there was no reply. She then filed a formal case against the bank for negligence and deficiency in service.
After reviewing the case, Commission President Thiruneela Prasad and Member A. Sankar ruled that the bank was at fault. The commission ordered the bank to:
- Waive the home loan taken by the late Vimal Rajesh Raj
- Pay ₹35.85 lakh as insurance coverage
- Pay ₹1 lakh as compensation for the mental agony caused to Lavanya
- Reimburse ₹10,000 towards legal expenses
The total compensation adds up to ₹36.95 lakh. The bank has been given a period of two months from the date of receiving the order to make the full payment.
This ruling highlights the importance of consumer rights and reminds banks and financial institutions of their duty to provide proper service and documentation, especially when it involves critical products like life insurance.
