The gig worker sold an accident-only policy
Sunita, 41, earns Rs 22,000 a month riding for a delivery platform. She has no dependants, Rs 1.5 lakh in savings and a Rs 2 lakh group health cover from the platform with a 10% co-pay and a room-rent cap. She asks POSP Anil for 'the cheapest policy that covers everything'. Anil sells her a personal accident policy with Rs 15 lakh sum insured for Rs 2,100 and says it 'covers all accidents, including hospital bills and lost wages'. Two months later Sunita is hospitalised for five days with dengue; the bill is Rs 48,000. The group policy pays Rs 32,000 after the co-pay and room-rent limit. She loses three weeks of income. The personal accident claim is rejected because dengue is an illness, and she calls Anil saying he misled her.
1. Is a personal accident policy the right product for Sunita's stated need? Explain what such a policy covers and what it does not.
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No. A personal accident policy is an accident-only contract. Depending on the wording, it pays for accidental death, permanent total or partial disability, temporary total disability and, if opted, accident medical expenses. It does not pay for illness.
Dengue is an illness, so the hospital bill and the lost income fall outside the policy. The group health cover is an indemnity product with a co-pay and room-rent cap, which is why it paid only Rs 32,000 of Rs 48,000; the shortfall is a health-insurance gap, not an accident claim. Sunita's three weeks of lost income from sickness is also not an accident benefit.
The correct analysis is therefore: the product sold addresses a different risk (accidental injury or death) and cannot fulfil her request for a policy that 'covers everything'. The rejection is consistent with the wording, but the sale was unsuitable.
2. What should Anil have recommended given Sunita's profile, and what disclosures should have accompanied it?
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Her real exposures are: hospital costs above the group cover, including the co-pay and room-rent shortfall; a serious accident causing disability and loss of earning; and the fact that the group cover is employment-linked and may disappear. With no dependants and modest savings, affordability matters.
A suitable package would be:
- An individual health indemnity policy, or a super top-up above the Rs 2 lakh group cover. A super top-up is attractive because it aggregates claims across the year against one deductible, which suits repeated hospitalisations.
- A personal accident policy for accidental death and disability, clearly described as accident-only.
The disclosures must include: the 30-day initial waiting period, the pre-existing disease waiting period, room-rent caps, co-pay, sub-limits, the claims process and the fact that the group cover may lapse with the job. Anil should also record in the proposal why the recommended product fits her need, and never describe a product as covering 'everything'.
3. Was Anil's statement that the policy 'covers hospital bills and lost wages' a breach, and what remedy does Sunita have?
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Yes. The statement is a misrepresentation of the product: a personal accident policy does not cover illness-related hospital bills or sickness-related income loss. The policy wording and the benefit table govern, not the sales pitch, so the claim rejection is technically correct, but the sale itself breached the code of conduct for POSPs.
Sunita can complain in writing to the insurer's Grievance Redressal Officer and then escalate to IRDAI's Bima Bharosa portal and the Insurance Ombudsman. The free-look period of 30 days has already passed, so automatic cancellation with refund is not available. However, if mis-selling is established, the insurer can cancel the policy, refund the premium and take action against Anil, including termination of his appointment; IRDAI can separately act against him.
The realistic remedy is refund of the Rs 2,100 premium and purchase of appropriate health cover. The dengue bill will not be paid under the accident policy, and Sunita should not be told otherwise.