Insurance policy
Insurance policy legal meaning, translation and judicial precedents.
Meaning & Judicial Interpretation: (اردو مفہوم اور قانونی تشریح)
Where two constructions are possible, the one that tends to defeat intention of policyholder or renders the coverage practically illusory must be rejected.
Respondent No.1 obtained a loan from a bank by mortgaging his agricultural land and the loan was compulsorily insured by the appellant company as per State Bank of Pakistan's directives
In September 2014, a severe flood devastated the area destroying crops, livestock, and house of respondent No.1
The area was officially declared a calamity-hit zone by the Government of Punjab
Respondent No.1 filed a claim for insurance compensation for loss of crops and livestock under the insurance policy
Insurance Tribunal granted respondent No.1 Rs. 131,000 for loss of Kharif 2014 crop; liquidated damages at 5% per annum from October 2014; and, directed the bank to adjust the said insurance claim amount in the account of borrower / respondent No.1
Being dissatisfied with the Tribunal's decision appellant (insurance company) instituted the present appeal
The controversy involved in the present matterwas centered upon the issue as to "whether the respondent No.1/policy holder was entitled to recover claim of loss of crops and livestock/sheep loan under insurance policy amounting to Rs.2,62,000/- along with liquidated damages on the basis of insurance policy"
Held: As per the agreement, in case of large scale catastrophe / calamity, appellant company would indemnify the insured up to 300% of the premium collected for Rabi and Kharif separately, based on 100% premium
The area where land of the respondent No.1 (policy holder) was located, was declared as calamity affected area, as such, the claim of the respondent No.1 (policy holder) was fully covered in the policy
Respondent No.1 (policy holder) availed loan facility from respondent No.2/bank by mortgaging his land
The loan was compulsorily insured with the appellant company
The area where the land of the respondent No.1 (policy holder) was situated, was badly affected by flood upon which it was declared calamity hit area
The meager amount of insurance claim of Rs.1,31,000/- of the insured / respondent No.1 (policy holder) was pending against the appellant company and it was legal right of the respondent No.1 (policy holder) to recover the same
No illegality or material irregularity, misreading and non-reading of evidence in the impugned judgment passed by the insurance tribunal was pointed out
Appeal being devoid of any merits was dismissed, in circumstance.
Petitioner / policy holder was aggrieved of failure of respondent / insurer to return, at the time of maturity of policy, the full amount of premium deposited by him along with profits
Plea raised by respondent / insurer was that petitioner / policy holder had been communicated regularly through Call Back Confirmation (CBC)
Validity
Respondent / insurer was bound by law and had no option but to communicate policy holder the status of policy, unit linked policy, statutory funds, creation of statutory fund and units, allocation of units to policy holder and details of investment of amount of premium including name of the company or government security as required by law
Phrase "throughout the policy cycle" and any "ancillary matters" were very significant and were purposely inserted by law maker to safeguard and protect rights and particularly pecuniary rights of policy holder who was the only stakeholder in insurance business
Steps or proceedings required to be communicated to policy holder were to be proved and established by insurer, through strong, reliable and cogent evidence
Respondent / insurer failed to prove CBC in accordance with terms of law
Conversation (CBC) recorded by respondent / insurer could not be termed as communication to petitioner / policy holder as CBC was totally silent about creation of funds, units and investment etc. and such type of evidence was not admissible in evidence
Insurance Tribunal decided relevant issues against respondent/insurer and in favour of petitioner / policy holder
Insurance Tribunal directed respondent / insurer to pay premium excluding the paid amount along with liquidated damages as laid down in S. 118 of Insurance Ordinance, 2000
Insurance Tribunal directed Insurance Companies to appoint qualified insurance agents who had qualified the courses; agent must explain each and every aspect of insurance policy, including special terminology in simple words and in the language of prospective policyholder; video should also be made wherein advice of insurer agent and queries raised by intended policyholder should be recorded; such record should be submitted along with all written replies of insurance companies; in the case of filing of insurance petition, the same video should be given on demand to policyholder
Insurance Tribunal further directed Insurance Companies to communicate to policyholder full information regarding policy and any ancillary matters relating thereto, nature of different funds, creation of statutory funds, location of units and investment of premium amount fund in sound equity, including its name, so that policyholder could know value of his / her / its units timely in an effective manner throughout the policy cycle, as provided in Insurance Rules, 2017 and Corporate Insurance Agents Regulations, 2020
Insurer and corporate insurance agent should provide detail of illustrations to prospective policyholder as per the formant provided by the Commission from time to time with profit on maturity or surrender and insurance agents should ensure that illustration plan given in the prospective policy order as to stand alone document and should also provide a reasonable time to understand the illustration before purchasing life insurance policy
Insurers should also ensure that a specified person must carry out insurance need analysis of the prospective policy holder strictly to accommodate with the terms given in Regln. 18(f) of Corporate Insurance Agents Regulations, 2020
Insurance Tribunal also directed that in case prospective policy holder was an illiterate or individual person or was a lady, whether educated or uneducated, the insurer or its agent should ensure presence of an independent educated advice, preferably of male member of her family, who should also be a witness of policy documents
Insurance Tribunal directed bilingual policy documents in Urdu and English in plain and simple language so that the policy holders, if not much qualified, could understand the nature of the plan sold
Insurer should strictly abide by the directions given in R. 56 of Insurance Rules, 2017
Insurance Tribunal also directed that in future all insurance companies dealing in business of life insurance should preferably invest amount of premium after creating the fund chosen by policyholder in a company having at least the rating of AA+ issued by Pakistan Credit Rating Agency to protect interest of policy holders and to save the insurer from unnecessary litigation
Pakistan Credit Rating Agency issues rating of different companies from time to time and AA+ company has the capacity of low expectation of credit risk and indicates strong capacity for timely payment of financial commitment and such capacity is not significantly vulnerable to foreseeable events
Insurance companies in any circumstance should comply with such important direction and violation of the same would entail serious consequences
Insurance Tribunal also directed that SECP and all insurance companies must have universal phone numbers and websites which should answer FAQ's and all other questions arising in the minds of policyholders
Insurance Tribunal further directed that insurers should also submit a complete record of compliance of mandatory provisions of law at time of filing of insurance petition before Insurance Tribunal
Insurance Tribunal further directed that the SECP as regulator of all insurance companies, should ensure that insurance companies are complying with such directions
Petition was allowed accordingly.
Petitioner / policy holder was aggrieved of failure of respondent / insurer to return, at the time of maturity of policy, the full amount of premium deposited by him along with profits
Plea raised by respondent / insurer was that petitioner / policy holder had been communicated regularly through Call Back Confirmation (CBC)
Validity
Respondent / insurer was bound by law and had no option but to communicate policy holder the status of policy, unit linked policy, statutory funds, creation of statutory fund and units, allocation of units to policy holder and details of investment of amount of premium including name of the company or government security as required by law
Phrase "throughout the policy cycle" and any "ancillary matters" were very significant and were purposely inserted by law maker to safeguard and protect rights and particularly pecuniary rights of policy holder who was the only stake holder in insurance business
Steps or proceedings required to be communicated to policy holder were to be proved and established by insurer, through strong, reliable and cogent evidence
Respondent / insurer failed to prove CBC in accordance with terms of law
Conversation (CBC) recorded by respondent / insurer could not be termed as communication to petitioner / policy holder as CBC was totally silent about creation of funds, units and investment etc. and such type of evidence was not admissible in evidence
Insurance Tribunal decided relevant issues against respondent/insurer and in favour of petitioner / policy holder
Insurance Tribunal directed respondent / insurer to pay premium excluding the paid amount along with liquidated damages as laid down in S. 118 of Insurance Ordinance, 2000
Insurance Tribunal directed Insurance Companies to appoint qualified insurance agents who had qualified the courses; agent must explain each and every aspect of insurance policy, including special terminology in simple words and in the language of prospective policyholder; video should also be made wherein advice of insurer agent and queries raised by intended policyholder should be recorded; such record should be submitted along with all written replies of insurance companies; in the case of filing of insurance petition, the same video should be given on demand to policyholder
Insurance Tribunal further directed Insurance Companies to communicate to policyholder full information regarding policy and any ancillary matters relating thereto, nature of different funds, creation of statutory funds, location of units and investment of premium amount fund in sound equity, including its name, so that policyholder could know value of his / her / its units timely in an effective manner throughout the policy cycle, as provided in Insurance Rules, 2017 and Corporate Insurance Agents Regulations, 2020
Insurer and corporate insurance agent should provide detail of illustrations to prospective policyholder as per the formant provided by the Commission from time to time with profit on maturity or surrender and insurance agents should ensure that illustration plan given in the prospective policy order as to stand alone document and should also provide a reasonable time to understand the illustration before purchasing life insurance policy
Insurers should also ensure that a specified person must carry out insurance need analysis of the prospective policy holder strictly to accommodate with the terms given in Regln. 18(f) of Corporate Insurance Agents Regulations, 2020
Insurance Tribunal also directed that in case prospective policy holder was an illiterate or individual person or was a lady, whether educated or uneducated, the insurer or its agent should ensure presence of an independent educated advice, preferably of male member of her family, who should also be a witness of policy documents
Insurance Tribunal directed bilingual policy documents in Urdu and English in plain and simple language so that the policy holders, if not much qualified, could understand the nature of the plan sold
Insurer should strictly abide by the directions given in R. 56 of Insurance Rules, 2017
Insurance Tribunal also directed that in future all insurance companies dealing in business of life insurance should preferably invest amount of premium after creating the fund chosen by policy holder in a company having at least rating of AA+ issued by Pakistan Credit Rating Agency to protect interest of policy holders and to save the insurer from unnecessary litigation
Pakistan Credit Rating Agency issues rating of different companies from time to time and AA+ company has the capacity of low expectation of credit risk and indicates strong capacity for timely payment of financial commitment and such capacity is not significantly vulnerable to foreseeable events
Insurance companies in any circumstance should comply with such important direction and violation of the same would entail serious consequences
Insurance Tribunal also directed that SECP and all insurance companies must have universal phone numbers and websites which should answer FAQ's and all other questions arising in the minds of policyholders
Insurance Tribunal further directed that insurers should also submit a complete record of compliance of mandatory provisions of law at time of filing of insurance petition before Insurance Tribunal
Insurance Tribunal further directed that the SECP as regulator of all insurance companies, should ensure that insurance companies are complying with such directions
Petition was allowed accordingly.
Policy/contract becomes effective from the date it is signed by the executants.
Policy/contract becomes effective from the date it is signed by the executants.
Deduction on account of salvage/debris of building and machinery was disallowed by the Insurance Tribunal on the ground that it was to be taken by the insurer and same could not be assessed to be deducted from the total amount of assessed losses
Validity
Said holding had no basis and was not borne out of the record
Said issue was dependent upon who kept the salvage and in the present case, there was no evidence to suggest that it was retained by the insurer
Surveyors were quite justified to deduct salvage from the claim on the notion that it would be retained by the claimant
Same could not have been added back on the misplaced plea that as the claimant was not willing to retain salvage, hence the salvage/debris (outcome of incident of fire) would be collected by the insurer
Impugned judgment to the extent of grant of claim in respect of salvage was set aside.
Argument on behalf of the insurer related to general practice whereby a depreciation clause was to be read in all matters relating to insurance claim
Validity
Insurer was specifically required by the Insurance Tribunal to establish whether there was a depreciation clause in the insurance policy or not
None had been demonstrated to exist in the contract of insurance and so it could not be argued by the insurer that such a clause must be read in all insurance policies
Tribunal had rightly returned the finding in favour of insured and against the insurer.
Contention of plaintiffs was that they being parents of deceased were entitled to get the share from the insurance amount whereas defendants contended that insurance claim was not a legacy of the deceased as terms and conditions of the insurance policy were that the insurance claim would be given to the survivor
Suit was decreed by the Trial Court which was upheld by the Appellate Court with certain modifications
Validity
Plaintiffs were entitled to have their shares in the claim of insurance policy of the deceased in accordance with their shares
No illegality or irregularity was committed by the courts below while passing the impugned judgments and decrees
No mis-reading or non-reading of evidence or any jurisdictional defect had been pointed out by the defendant
Revision was dismissed in circumstances.
Contract.
"Insurance policy", Pakistan Law Portal, available at: https://paklawportal.com/words-terms-maxims/124942612
Precedents & Case Laws citing "Insurance policy"
2025 C L D 122
Mst. RAZIA BEGUM — Petitioner Versus PUBLIC AT LARGE and others — Respondents
Court: LahoreP L D 2025 Lahore 40
Mst. RAZIA BEGUM — Petitioner Versus PUBLIC AT LARGE and others — Respondents
Court: High Court2021 C L D 659
LASANIA OIL MILLS — Appellant Versus SILVER STAR INSURANCE COMPANY LIMITED and others — Respondents
Court: Lahore2017 C L D 1575
EFU LIFE INSURANCE LIMITED through Chief Manager — Petitioner Versus ADDITIONAL DISTRICT JUDGE, GUJRANWALA and another — Respondents
Court: Lahore2023 C L D 1354
RELIANCE INSURANCE COMPANY LIMITED through Manager — Appellant Versus AHSAN IKRAM TEXTILE (PVT.) LIMITED through Director — Respondent
Court: Lahore2010 C L D 1171
Mst. FATIMA BEGUM — Appellant Versus STATE LIFE INSURANCE CORPORATION OF PAKISTAN and others — Respondents
Court: Lahore2014 C L D 893
PROJECT DIRECTOR, PUNJAB RURAL SUPPORT PROGRAM (PRSP) and 2 others — Appellants Versus REHMAT ALI and another — Respondents
Court: Lahore2014 P L C (C
PROJECT DIRECTOR, PUNJAB RURAL SUPPORT PROGRAM (PRSP), LAHORE and 2 others Versus REHMAT ALI and another
Court: Lahore High Court2011 C L D 948
STATE LIFE INSURANCE CORPORATION OF PAKISTAN through Chairman and another — Appellants Versus JAVED IQBAL — Respondent
Court: LahoreP L D 2020 Sindh 263
Mst. RABIA QAVI and others — Appellants Versus Mst. HINA QAVI KHAN and others — Respondents
Court: High Court