An insurance company that caused repossession of a car needed for hospital treatment of a handicapped boy has been ordered by a California jury to pay the father punitive damages of $872,001 - one of the half-dozen largest such awards in the state's history.

Commercial Bankers Life Insurance Co. of Newport Beach, Calif., also was ordered to pay the father, Joe Ingram, damages of $128,000 as compensation for mental and emotional distress caused by the repossession.

The combined award of $1,000,001 was made by a Riverside jury last week after a day's deliberations. The company, however, said it will ask Superior Court Judge J. David Hennigan for a new trial. He will be able either to affirm or reduce the award.

Ingram's son, Justin, 11, is a victim of muscular dystrophy, a progressively disabling disease.

Ingram, his wife, and their son live in Winchester, Calif., a desert town to which they moved several years ago. The move spared Justin the afflictions of Los Angeles smog, but required his mother to drive him at least 120 miles round trip to Fontana or San Diego for hospital therapy at least once a week.

They had a 1965 Plymouth that, after 200,000 miles, had become unreliable. In July 1975 they bought a new 1975 Oldsmobile station wagon on an installment plan. To make certain that the monthly payments of $191 would be made in the event of Ingram's disability, they bought a so-called credit disability policy from Commercial Bankers.

Six months later, Ingram suffered a disabling back injury that left him unable to continue woork as a truck driver for General Cable Corp. in Los Angeles. He filed a claim with the insurer, which then paid the bank that had made the auto loan about $600 over a period of 3 1/2 months.

Then the insurance company decided - without notifying Ingram - to stop making payments. The result was that one day in August 1976, when Ingram left the Oldsmobile on a Winchester street while he went to the post office, a bank agent repossessed it.

During the six-day trial, Ingram testified that he saw the car being driven away, assumed it was being stolen and called police, only to be humiliated to learn it had been repossessed. Had he known of the stop in payments, he said, he would have borrowed money to make them.

Ingram told the jury that he made several phone calls and finally wrote to Commercial Bankers to plead that he needed the station wagon for his son's hospital therapy but he was ignored.

Still prevented by his back disability from returning to his job, Ingram was forced into bankruptcy and had to sell his house. Meanwhile, his wife had to resume using the unreliable old car to take Justin to the hospital for therapy.

Crucial testimony came from orthopedic surgeon Joseph Kleim, who had been retained by Commercial Bankers to examine Ingram.

The insurer said the examination showed Ingram to be able to work and that it consequently stopped making the payments.

But Dr. Klein, called as a witness for Ingram, told the jury the insurer hadn't told him Ingram's job required him to load and unload heavy equipment. For work of that kind, Klein testified, Ingram was disabled. It was his job, not simply an ability to work, that the policy covered.

Ingram said he plans to donate half of his award, after attorney's fees, to the Muscular Dystrophy Foundation. Ingram's lawyer, William M. Shernoff of Claremont, Calif., said he plans to donate a portion of his fee to the launching of a new insurance consumer organization.

Commercial Bankers president John Rousseau did not return a reporter's phone call.