In a significant legal development regarding insurance claims, the Allahabad High Court has overturned the decision of Oriental Insurance Company to deny a Rs 5 lakh death benefit to the unmarried sister of a deceased policyholder. The court ruled that the woman, who was financially dependent on her late brother, is entitled to the insurance payout as his legal heir, despite the insurer’s contention that a sister was not included in the scheme's definition of a family member.
The case stems from a tragic road accident that occurred on May 18, 2019, which resulted in the death of the insured individual. Following the incident, the man’s sister sought the Rs 5 lakh benefit provided under the Mukhyamantri Kisan Evam Sarvahit Bima Yojana. Initially, the insurance company rejected her application in October 2019, arguing that the Memorandum of Understanding governing the policy did not recognize a sister as a covered family member.
The dispute was subsequently reviewed by a district committee in Basti. Following a report submitted by the local sub-divisional magistrate, the committee established that the deceased man had been the head of the family and the primary breadwinner. Consequently, the district committee directed the insurer to process the claim and disburse the funds. Despite this directive, the company maintained its refusal to pay, leading the woman to challenge the rejection in the high court.
During the proceedings, the insurance company maintained that its liability was strictly limited by the terms of the policy, which excluded sisters from the list of covered members. However, a division bench of the high court, comprising Justice Garima Prashad and Justice Prakash Padia, examined the distinction between individuals covered for personal accidental injury and those entitled to receive the death benefit upon the passing of the insured breadwinner.
In its order dated October 26, 2026, the court noted that while the scheme clearly defines family members for insurance coverage, it does not explicitly restrict the disbursement of death benefits to only those listed in that specific clause. The bench observed that the policy contained an express provision for the payment to be made to a nominee or legal heir in the event of the insured’s accidental death. The court concluded that the omission of a sister from the primary list of family members could not serve as a basis to defeat the rights of a legal heir.
The high court clarified that this ruling specifically addresses the entitlement to death benefits and does not imply that sisters are automatically eligible for personal medical or accidental injury coverage under the same scheme. By quashing the company’s April 2021 rejection, the court has mandated that the payment be processed within four weeks of the insurer receiving a certified copy of the judgment.
The district magistrate of Basti has been instructed to facilitate the payment in accordance with the standard claim procedures. This judgment provides a significant precedent for legal heirs seeking benefits in similar cases where insurance companies rely on restrictive definitions to deny claims, reinforcing that established legal heirship remains a valid basis for receiving policy benefits.
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