Insurance firm denied Rs 5 lakh to sister after brother's death, Allahabad HC overrules

AI generated image used for representative purposeNEW DELHI: The Allahabad high court has ruled that an unmarried sister cannot be denied the accidental death benefit merely because she is not listed as a covered family member. It directed an insurance company to pay Rs 5 lakh to a woman whose claim it had rejected.In its October 26, 2026, order, the high court quashed the Oriental Insurance Company’s rejection of the claim under the Mukhyamantri Kisan Evam Sarvahit Bima Yojana.Why did the insurance company reject the claim?As per the court order, the woman’s brother died in a road accident on May 18, 2019. She said that he was the sole breadwinner of the household and that she, being unmarried, was dependent on him.After his death, she sought Rs 5 lakh under the state’s insurance scheme. In October 2019, the insurance company rejected her claim, saying that a sister was not included in the definition of family in the scheme’s memorandum of understanding.The matter was then placed before the district committee in Basti. After considering a report from the sub-divisional magistrate, the committee recorded that the deceased was the head of the family and directed the insurer to accept the claim and make the payment.The woman was informed of this decision in March 2021. The company, however, maintained its rejection, reiterating that a sister was not eligible for the benefit after her brother’s death.The woman then approached the high court. She argued that she was her brother’s legal heir and that the scheme provided for payment to a nominee or legal heir after the accidental death of the insured head or breadwinner of a family.The insurer countered that its liability was governed by the memorandum of understanding and the policy, and that a sister was not among the family members covered under them.Why did the high court rule in her favour?A division bench of Justice Garima Prashad and Justice Prakash Padia examined the distinction between people covered for insurance benefits and those entitled to receive the money after the insured person’s death.The bench noted that the scheme covered the head or breadwinner for personal accident insurance of up to Rs 5 lakh. A separate provision stated that, in the event of the insured person’s accidental death during the policy period, the amount had to be paid to the nominee or legal heir.“The omission of a sister from the list of covered family members cannot itself create such a dispute or defeat the express provision for payment to a legal heir,” the court noted.The bench also noted that the insurer had wrongly applied the clause defining covered family members to decide who could receive the death benefit. It said the agreement did not restrict payment to a legal heir who was also a covered family member.The court then clarified that this did not mean sisters were automatically covered for their own accidental injuries or medical treatment under the scheme. The ruling concerned only entitlement to receive the death benefit after the insured breadwinner’s death.The high court allowed the woman’s petition and quashed the rejection communicated by Oriental Insurance Company on April 16, 2021.It directed the insurer to pay Rs 5 lakh within four weeks from the date the company receives a certified copy of the judgment. The district magistrate, Basti, was directed to facilitate payment under the claim procedure.The court made no order on costs.