Insurance Company Caught Using Non-Existent Clause to Reject Dead Farmer’s ₹4 Lakh Claim

In a scathing judgment against corporate high-handedness, the State Consumer Disputes Redressal Commission has ripped into an insurance company for fabricating rules to deny a dead farmer's family their rightful claim. Upholding a lower court's order, the Commission ruled that insurance companies cannot invent provisions out of thin air to dodge payouts, calling the move a "gross deficiency in service."

The case dates back to June 2016, when Budhabhai Ranchhodbhai Gabu, a farmer from Rampara village in Botad district, died of accidental electrocution. Because the Gadhada Agricultural Produce Market Committee (APMC) had secured a Group Accident Insurance Policy for its registered farmers, Budhabhai’s family was entitled to a ₹4 lakh death benefit.

Instead of helping the grieving family, the insurance company rejected the claim. They alleged that the farmer had an illegal power connection, claiming an "exclusion clause" in the policy stripped him of coverage.

However, the consumer court exposed the company's tactics.

The District Commission—led by member judge Priti Shah and presiding member A.C. Rawal—originally ruled in favor of the family, ordering the company to pay the ₹4 lakh with 7% interest. The insurance company appealed the ruling, but the State Commission completely dismantled their defense, noting three critical facts:

• Clear Evidence: Official police reports, panchnama documents, and the post-mortem report all definitively proved the death was a tragic accident.
• The Fake Clause: The "Exclusion (H)" clause the company used to reject the claim did not even exist in the policy document.
• No Criminal Intent: The Commission clarified that to deny a claim based on a violation of law, an insurer must prove criminal intent. No such evidence existed here.

Dismissing the company’s appeal, the State Commission ordered them to pay the original ₹4 lakh with interest, plus an additional ₹10,000 to cover the family's legal expenses.

This landmark ruling sends a clear, uncompromising message to the insurance industry: companies cannot use fabricated fine print and arbitrary tactics to cheat consumers out of their rightful dues.

Anatomy of the Incident: How the Accident Happened

The tragedy occurred while Budhabhai Gabu was on the terrace of his home, spraying water. The pipe attached to the water motor slipped off, and as he attempted to reconnect it, he suffered a fatal electric shock. While local government and police investigations confirmed it was a pure accident, the insurance company weaponized unproven allegations of an illegal power connection to deny the ₹4 lakh safety net to his family—a tactic the court has now firmly penalized.