Last Updated on October 8, 2023 at 1:44 pm
Will a life insurance claim be denied if the insured died in an accident where he was the driver without a valid driver’s license or valid vehicle insurance? Thanks to a question by Ganapathy Krishnan at Facebook group, Asan Ideas for Wealth, I was able to obtain an authoritative answer to this question from the insurance ombudsman case files.
I am not one to beat around the bush. So the answer to the question is, NO, the life insurance claim will not be denied if the driver met with an accident without a valid drivers license and/or vehicle insurance.
However, if the life insurance policy had an accident insurance rider and/or if there is a separate accidental death claim, the claim will be rejected as an invalid drivers license and/or invalid vehicle insurance constitutes a breach of the Motor Vehicles Act, 1988 (and amendments there upon).
Now, let us investigate the evidence. I am fan of reading through the insurance ombudsman case files because it can so illuminative. See:
Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! 🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥
No insurer will hand life insurance claim amount on a platter!
or The Games Life Insurers play!
Of course, those posts had a negative tone as opposed to this one (wrt life insurance).
So let us explore the evidence:
Case No. LIC/332/Karnal/Sonipat/24/06
Source: http://www.gbic.co.in/LIC/deathclaim/DeathClaim-Book5.pdf
Page 36.
A person with a valid license for driving 2 and 4 wheelers (light motor vehicles) met with an accident and died while driving a tractor.
The life insurance claim was paid and the accident rider claim was denied. When the nominee appealed to the ombudsman, they upheld the decision of the insurer.
Case No. LI – 156 of 2005-06
Source: http://www.gbic.co.in/LIC/deathclaim/DeathClaim-Book4.pdf
Page 220.
A person died while driving a vehicle under the influence of alchohol. The life insurance claim was honored but the accidental death benefit was denied. The nominee went to the Ombudsman stating that the levels of alchohol was “slight”.
The ombudsman ruled that any level of intoxication is breach of section 185 of Motor Vehicles Act, 1988 (“driving by a drunken person is a punishable offence”) and sided with the insurance. The accident benefit was denied.
Case No. : IO (CHN)/ 21.07.2407/2007-08
Source: http://www.gbic.co.in/LIC/deathclaim/DeathClaim-Book8.pdf
Page: 46
A person with 3 life insurance policies met with an accident while driving a two wheeler with two other passengers. The life insurance claims were settled by the insurer but the accident riders were not.
The ombudsman gave an interesting verdict! They said prima facie, three people on a two wheeler is a breach of law and the accident claim should be denied, However,
“in a case where the accused had succumbed during the accident we need to go in-depth into the facts. Wherever there is a loss of life in an accident the police generally frame a charge of negligent or rash driving under the relevant provision of law in Indian Penal Code and if the accused succumbed to the injuries then the ‘charges’ are abated and case is treated as ‘closed’ by the competent authority. In the eyes of law no person is guilty of breach of law unless he is tried in a court and guilt is established. In fact, technical offences which have not been established in a court of law need not constitute breach of law as contemplated by the insurer for paying accident benefit unless moral turpitude is also established. In view of this legal position depriving the nominee the benefit of accident benefit appears to be wrong. The complaint was allowed”
This verdict is baffliling to say the least. The same logic can be applied to the above two cases, can it not?!
There are four lessons here
- Any breach of the motor vehicles act is not relevant to a life insurance claim. It will be honoured.
- However, accident claims will definitely be denied by the insurer (at least initially).
- The verdict depends on the Ombudsman – Chennai Centr, Mumbai Centre etc.
- We should instruct our nominees to search in the Ombudsman case files for precedents in case there is a problem with the claim. This will help us fight our case better.
Ombudsman Case Files
http://www.gbic.co.in/LIC/deathclaim/DeathClaim-Book1.pdf (Change no from 1 to 8 for a delightful read!)
The steps to approach the ombudsman can be found here
______________________
Ask Questions with this form
And I will respond to in the weekend. I welcome tough questions. Please do not ask for investment advice. Before asking, please search the site if the issue has already been discussed. Thank you.
[contact-form][contact-field label=’Name’ type=’name’ required=’1’/][contact-field label=’Email’ type=’email’ required=’1’/][contact-field label=’Comment’ type=’textarea’ required=’1’/][/contact-form]
Thank you for the wonderful reviews of GameChanger!
My second book, Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you want, co-authored with Pranav Surya is now available at Amazon as paperback (₹ 199) and Kindle (free in unlimited or ₹ 99 – you could read with their free app on PC/tablet/mobile, no kindle necessary).
You can Be Rich Too with Goal-Based Investing
is my first book with PV Subramanyam. It helps you ask the risk questions about money, seek simple solutions and find your own personalised answers with nine online calculator modules.
The book is available at:
Amazon Hardcover Rs. 279. 30% OFF
Infibeam Now just Rs. 270 32% OFF. If you use a mobikwik wallet, and purchase via infibeam, you can get up to 100% cashback!!
Flipkart Rs. 279. 30% off
Kindle at Amazon.in (Rs. 90.74 74% OFF) Read with free app
Google PlayRs. 90.74 Read on your PC/Tablet/Mobile
Now in Hindi!
Pre-order the Hindi version via this link
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter with the form below.
- Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
Explore the site! Search among our 2000+ articles for information and insight!
About The Author
Dr. M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter, Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu gets a superpower!” is now available!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & it's content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our YouTube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.Your Ultimate Guide to Travel
This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)