Description
Describes different types of general insurance like home insurance, travel insurance, auto insurance, fire insurance and basics of indemnity.
Business Law Assignment – General Insurance
General Insurance
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General Insurance
Insurance other than ‘Life Insurance’ falls under the category of General Insurance. General Insurance comprises of insurance of property against fire, burglary etc, personal insurance such as Accident and Health Insurance, and liability insurance which covers legal liabilities. Various Types of General Insurance:
Home Insurance
Every man has a dream to own a house one day. For an ordinary person it takes a whole lifetime of savings to build a house. And one cannot predict a natural calamity Hence home insurance is very important. Home insurance policy available in the market covers broadly two things:
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Building structure Contents inside the home
Insurance Covers for a Building Structure 1. The Fire and Special Perils Cover This is a comprehensive packaged cover that covers damages to the structure of home due to
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Fire Storm, tempest, flood & inundation Riot, strike & malicious damage Lightning Explosion & implosion Aircraft damage Damage due to impact by vehicles Subsidence, landslides and rockslides Bursting and/or overflowing of water tanks, apparatus and pipes Missile testing operation Leakage from automatic Sprinkler installations Bush fire
2. Earthquake Cover: Covers damages to the structure of your house due to earthquake 3. Terrorism Cover: Covers damages to the structure of your house due to acts of terrorism. A home insurance does not cover the market value of the home. The price of the home includes the cost of the land and the cost of constructing the building structure on this land and the land cannot be insured.
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The insurance cover is only for the cost of constructing the building. The sum insured is calculated by multiplying your home area by the construction rate per sq. feet. Insurance Cover for Contents inside the Home This cover is only for damages or loss of the contents inside the home -electronic and electrical goods, furniture and fixtures, clothing, jewelry and any other contents inside the home. The covers that can be taken for the contents are as follows:
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The Fire and Specials Perils Cover Earthquake Cover Burglary Loss / damage to contents due to burglary or an attempted burglary Loss of jewelry, gold ornaments, silver articles and precious stones kept under lock & key
All the contents are covered on the market value of the items. This means that if there is a loss, the claim would be paid on the value of purchasing a similar new item, minus depreciation Householders' package policy The Householders' package policy is a policy which offers covers that are suitable for a household. Instead of taking different policies the client can opt for multiple sections or covers of his choice under one policy. There are ten sections under the Householders' package policy: Section I Section II Section III Section IV Section V Section VI Section VII Section VIII Section IX Section X Fire & Allied Perils Burglary & Housebreaking including larceny or theft (Contents only) All Risks Plate Glass Breakdown of domestic appliances Television sets & VCR / VCP/ VCD Pedal cycle Baggage Personal Accident Public Liability Risks and Workmen's Compensation Risks
Only section I B (fire) for contents is compulsory. In addition, two more sections need to be covered under the Householders' package policy. If a client selects more than four sections, a discount of 15 percent is available. If he selects more than six sections, a discount of 20 percent is available on the nontariff sections Under the Householders' Package policy - Fire, public liability, workmen's compensation are tariff sections while the rest are non-tariff sections. There is NO limit on the amount of cover that can
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be availed of under the Householders' Package policy. A single amount can be taken for all the contents only if the value of any single item exceeds 5 percent of the amount of insurance and the same is to be declared separately otherwise the value of that item will be considered of a maximum of 5 percent. Under the Householders' Package policy, jewellery should be listed individually along with the values. Jewellery lying in bank vaults be covered under the Householders' Package policy The Householders' Package policy can be issued for a maximum period of one year Householder's Insurance policy: Householder's Insurance policy is designed to cover risks and contingencies faced by householders under a single package policy. It provides protection for property and interests as well as legal liability of the insured and his/her family members who permanently reside with the insured. The premium rate for the Householder's Insurance policy is calculated at 0.65 per thousand rupees value of the Capital Sum Insured. The Capital Sum Insured is derived at the time of commencement of the policy from the Market Value of the property. Electronic items, computers and their peripherals, dish antennae are not covered under the Householder's Insurance policy. A separate Electronic Equipment policy must be implemented to provide cover for them. Exceptions against cover within the preview of the Householder's Insurance Policy: The householder's Insurance policy, any loss or damage suffered to the following is treated as an exception and cannot be claimed.
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Consumable articles Money Securities Stamps Stamp collection Bullion Livestock Motor vehicles Pedal cycle Deeds Bonds Bills of exchange Promissory notes Shares Books Manuscripts Loose precious stones Jewellery and valuables
Exceptions for cover towards Plate Glass under the Householder's Insurance policy: Householder's Insurance policy, the exceptions for cover of Plate Glass are
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Breakage during removal Alterations and/or repairs
Breakage of lettering
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Frames and frameworks Disfiguring or scratching for damage of glass other than fracture extending through the entire thickness of glass
Premium Payable for Plate Glass is calculated at 10 percent of the Actual Value of the Plate Glass. Premium Payable for Television sets and VCRs is calculated at 10.05 percent of the Market value. Perils against which Television sets and VCRs are insured the loss and/or damage that might arise from
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Fire and allied perils Burglary Housebreaking or theft Accidental external means and Mechanical or domestic breakdown
The admissible legal liability for damage to the insured's own surrounding property due to collapse of antenna is limited to Rs.25000/-
Travel Insurance
Policy covers financial risks that may occur due to:
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Trip Cancellation/Interruption Medical emergency Hijack Personal accident Events like delay or missed departure Delayed arrival or Loss of baggage Passport loss and legal expenses Loss of cash, or valuables
Main Features of Travel Insurance Policies Available in India
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Policy is available for all ages between 1 – 70 years and senior citizens between 71 and 85 years. They cover trips from as short as 7 days to 180 days. Offer various coverage options ranging from US $ 50,000 to US $ 500,000. Premium is generally payable on a pay per day basis and not on slab rates. Pre-existing ailments and maternity usually are excluded Generally, no health-check up is required up to 70 years of age. Additional coverage’s that can be included in the basic travel policy are: dental treatment, medical evacuation, repatriation, baggage loss/delay, trip cancellation and interruption, etc
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For frequent international travelers, Multi-Trip Plan is available. The policy is valid for 1 year and one can choose between 2 options of 30 or 45 days as the maximum duration per trip. Baggage Insurance is insurance that covers the loss or damages to personal baggage of the policyholder or his family members due to fire, theft or accident during the course of journey anywhere in India including stoppage enroute. Executive Travel Policy: Any Indian National over the age of 18 years residing in India is entitled for Executive Travel Policy against risks during their travel overseas and within India on the following basis:
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Travel Overseas - All 24 hours during the covered trip up to 60 days only Travel Within India - Travels by commercial plane as a ticketed passenger by train / licensed coach / taxi including private taxi, outstation use of company car and while as a pedestrian but excluding two wheelers or the public road transport system.
Maximum indemnity available under the Executive Travel Policy In case of personal accident, the maximum limit of indemnity is Rs.30 lakhs. In case of loss of checked baggage outside India, the maximum limit of indemnity is Rs.75, 000/- and within India it is Rs.40, 000/Suhana Safar Policy: All domestic travelers can opt for this policy. It covers the risk of accident to the policyholder, spouse and dependent children and loss of baggage during the period of his outstation travel within India. Maximum liability available for personal accident is Rs.1, 00,000 per person and liability for loss of baggage is limited to Rs.15, 000/- where the number of people covered is 4. Period of insurance coverage available under this package is for a single round trip to all the declared places (including places enroute) up to the scheduled date of return. The policy cover is available for trips up to 60 days only. However the policy can be extended to cover further 60 days on payment of additional premium. Suhana Safar Policy This policy is specially designed to cover domestic traveler including baggage. Period of insurance is 60 days. It can be extended to further 60 days on payment of additional premium. Executive Travel Policy This policy is designed to cover Indian Nationals traveling abroad. Period of insurance is 60 days. Overseas Mediclaim Policy This policy is devised to cover people travelling abroad for business, pleasure, study and for employment. Period of insurance is 180 days for business and pleasure travel and for employment and study purpose, the policy is issued on annual basis.
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Auto Insurance
Auto insurance Is mandatory for all new vehicles, be it for commercial or personal use. Insurance Companies are coming out with comprehensive policies for its customers. They are also tying up with leading automobile manufacturers for a swift insurance process. An automobile may be insured against loss or damage by accident, fire, burglary, while in transit; third party accident etc. Auto insurance companies come out with unique plans for four wheelers, two wheelers, commercial vehicles. Types of Auto Insurance Available: ? ? ? Two Wheeler Insurance Car Insurance Commercial Vehicle Insurance
Calculation of Auto Insurance Amount/Premium: Insurance companies are providing value- added service to its client by offering them instant auto quotes. Auto premium is determined by a number of factors like, make of the vehicle, year of manufacture, place of registration, current showroom price of the vehicle and model of the vehicle. It also depends whether the client is individual or corporate etc. The amount of premium increases with the increase in the price of the vehicle. Companies renew policies after expiry. A discount on premium is sometimes provided to existing clients. Auto Insurance Coverage There are two types of car insurance - comprehensive and third party. Third-party insurance covers only damage caused by the vehicle to other people or property. These policies are valid for a year. Your car insurance company should notify you by mail when it's time to renew the policy. Risks covered by the Third Party policy: The Third Party car insurance policy covers a vehicle owner's legal liability for any compensation to be paid arising from any accident caused by the use of the vehicle. These include: ? ? Death or bodily injury to a third party person Damage to third party property
The liability is covered for an unlimited amount in case of death or injury. Damage to third party property is covered by the insurance policy as follows - up to Rs. 1 lakh for private vehicles, scooters, and motorcycles and up to Rs.7.5 lakhs for commercial vehicles. Comprehensive insurance covers risk arising out of theft or damage to the vehicle, death of the driver and/or passengers in the vehicle, and damage caused by the vehicle to other people or property. Risks covered by the Comprehensive policy:
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In addition to the cover provided by the Third Party car insurance plan, the Comprehensive insurance policy protects you against any loss or damage caused to the vehicle and its insured accessories due to natural and man-made calamities. These include: ? ? Natural calamities, such as fire, explosion, self ignition or lightning, flood, typhoon, hurricane, storm, tempest, inundation, cyclone, hailstorm, frost, landslide, rockslide, and fire and shock damage due to earthquake Man-made calamities, such as burglary, housebreaking or theft, riot or strike, accident by external means, malicious act, terrorist activity and damage during travel by road, rail, inland-waterway, air, or elevator
This policy also includes personal accident cover, which provides compulsory accident cover for the owner of the vehicle while driving. The owner can also avail personal accident cover for passengers in the vehicle. Another mandatory feature is the third party legal liability cover - it protects the owner against legal liability arising from an accident causing any permanent injury or death as well as any property damage. This insurance policy also pays for towing charges from the place of accident to the workshop, subject to a maximum of Rs.300/- for scooters and motorcycles and Rs.1,500/- for private cars and commercial vehicles. Also available is a restricted cover for fire and theft - only for vehicles that are laid up in a garage and not in active use. Apart from the optional covers available in the Comprehensive car insurance policy, there are some extension covers on the insurance that can be purchased. These include: ? ? ? Loss or damage of accessories fitted in the vehicle such as stereo, fan, air-conditioner, etc. Personal accident cover under private car policies for passengers and drivers Legal liability to be paid to employees or non-fare paying passengers in commercial vehicles
Different types of Personal Accident Covers available for drivers and passengers: An owner-driver of a private car is provided car insurance with personal accident cover of up to Rs. 2 lakhs while the owner-driver of a two-wheeler is covered for Rs. 1 lakh. A personal accident insurance cover can also be purchased at an additional cost to cover employed drivers and persons traveling in the vehicle, on a named as well as unnamed basis. Duration of Insurance: Your vehicle has to be insured at all times. This is required by law. All car insurance plans are annual policies issued for a period of twelve months. Therefore, you need to know when your insurance renewal is coming up. However, an extension for less than 12 months or a policy for a short period can be provided with special approval from a competent authority in the car insurance company.
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A car insurance policy has to be renewed before the expiry of the ongoing term of insurance. Delay in renewing a policy and thereby driving a vehicle without valid motor insurance is illegal and there are substantial penalties. Here are some scenarios where you will lose out:
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In case the uninsured vehicle has an accident, the insurance company is not liable and you would have to bear the liabilities alone, if any. If the policy is not renewed within 90 days of the expiry date of the previous policy, the No Claim Bonus cannot be claimed. If the policy expires and is not renewed on time, the insurance company will insist on a physical inspection of the vehicle before granting renewal.
Private cars that are over 15 years old are normally not considered for comprehensive cover. For vehicles between 10 and 15 years old, car insurance insurers insist on an inspection report from a surveyor certifying the condition of the vehicle. Motorcycles and commercial vehicles over 10 years old are normally not granted comprehensive insurance cover. However, remember that no age limit exists for purchasing the Third Party cover, which is a mandatory requirement for all vehicles. Auto insurance Claims Procedure: Auto insurance claims can be accidental, theft claims or third party claims.
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Insured should write the number of the other vehicle in case of an accident or third party claim Names of witness should also be written down File an FIR with the nearest police station Insured should then contact the insurance company and get a claim number A surveyor is appointed who reports the approximate value of loss or damage Based on the report of the surveyor, insurance companies try to send the amount to the insured within one to three weeks An individual might have to pay the repair charges himself and later get it reimbursed
Documents Required for Auto Insurance Claim: For Accident Claims: 1. 2. 3. 4. 5. 6. Claim form duly signed RC copy of the vehicle Driving license copy FIR on a case-to-case basis Original estimate Original repair invoice, payment receipt from the service center
For Third Party Claims: 1. 2. 3. 4. 5. Claim form duly signed RC copy of the vehicle Driving license copy Original policy copy Original FIR copy
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6. RTO transfer papers duly signed, mentioning that the vehicle cannot be located Steps after one has submitted the claim form for his damaged vehicle 1. After you submit your claim form and the relevant documents, the insurer appoints a surveyor to inspect your vehicle and submit his/her report to the insurance company. You also get the details of the surveyor's report. In case of major damage to the vehicle, the insurer arranges for a spot survey at the site of accident. 2. You can undertake repairs only on completion of the survey. Once the vehicle is repaired, you submit duly signed bills/cash memos to the insurance company. 3. Some companies have the surveyor re-inspect the vehicle after repairs. In such a scenario, you pay the workshop/garage and obtain a proof of release document (this is an authenticated document signed by you to release the vehicle from the garage after it is checked and repaired). 4. Once the vehicle has been released, you then submit the original bill, proof of release, and cash receipt from the garage to the surveyor. The surveyor sends the claim file to the insurance company for settlement along with all the documents. 5. Finally, the insurance company reimburses you. Relevant information: What if the accident takes place in a city other than where the motor insurance policy was issued? It does not matter where the accident takes place; if your motor insurance policy is in force, you remain insured throughout the country. How much would the insurance company pay in the event of an accident? In case of an accident, the insurance company pays for the replacement of the damaged parts and the labor fees. The costs that you have to bear include: ? ? ? ? The amount of depreciation as per the rate prescribed Reasonable value of salvage (if not repaired at the outlet) Voluntary deductions under the policy, if you have opted for any Compulsory excesses levied by the insurer
Will the insurance company pay an advance on the basis of a damage estimate? This practice varies by company. Most companies offer a cashless claim service whereby you don't have to pay for the repairs - the company handles them directly. Therefore, the question of an advance does not arise. In case you choose the non-cashless service, you are reimbursed once all the repairs have been completed and the bills have been submitted to the insurance company. In such cases, if you are unable to pay the entire charges, you need to inform the insurance agent and the insurer will make the balance payment.
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Can one produce bills at the end of the year and claim for small repairs carried out? No, a claim has to necessarily be lodged immediately - you cannot accumulate them. Thus, bills for small repairs accrued over the period of insurance will not be reimbursed by the insurer. Who bears the towing charges? Comprehensive insurance policies provide for towing charges from the place of accident to the workshop (subject to a maximum of Rs.300 for scooters and motorcycles and Rs.1500 for private cars and commercial vehicles). You can also opt for higher towing charges by paying extra premium. On your request for towing services in the event of an accident, the insurance company will pay up to the maximum limit specified or the actual amount spent, whichever is lower. Steps if one receives a Court notice from a third party claimant: In the event of a third party claim, notify the insurance company in writing along with a copy of the notice and your insurance certificate. DO NOT offer to make an out-of-court settlement or promise payment to any party without the written consent of the insurance company. The insurance company has a right to refuse liabilities arising out of such promises. The insurance company will issue a claim form that has to be filled and submitted along with: ? ? ? Copy of the Registration Certificate Driving license First information report (FIR)
After verification, the insurance company will appoint a lawyer in your defense. You are expected cooperate with the insurance company, providing evidence during court proceedings. If the court orders compensation on your part, the insurance company will then do it directly. What if one have an accident with an uninsured vehicle? What is the extent to which one is covered? It does not matter whether the vehicle on the other side has insurance or not. If you have a comprehensive policy for your vehicle, you are fully insured against liabilities, subject to your policy specifics. If there is a dispute regarding the claim settlement between the insured and the insurer, how is the dispute resolved? The most common form of dispute that arises between the insured and the insurer is about admission of liability or the size of the claim. Disputes regarding claim amounts, where the insurer has agreed to cover the claim under the policy, are referred to an arbitrator. If the decision of the arbitrator is disputed by either party, the Consumer Forum or the Civil Court could be approached.
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Fire Insurance
A fire insurance policy involves an insurance company agreeing to pay a certain amount equivalent to the estimated loss caused by fire to the insured, within the time specified in the contract. The indemnity is subject to change depending upon the policy. One should confirm with the insurer about the types of risks covered, since one cannot insure the property against all types of risks of fire. Extent of coverage under a Fire Insurance Policy: Fire insurance provides protection for the estimated value of the physical house. However, there are a number of exclusions to the same, for example medical bills, loss of human life and pets, loss of personal belongings, structures outside the property (including garages and gazebos), damage to the landscape and expenses for accommodation for the time being. These things can be covered under a package of extended property insurance. Main types of Fire Insurance policies: ? Specific Policy: The insurer is liable to pay a set amount lesser than the property’s real value. In this policy, the property’s actual value is not considered to determine the indemnity. The average clause, which requires the insured to bear the loss to some extent, does not play a role in this policy. In case the insurer inserts the clause, the policy will be known as an average policy. Comprehensive policy: This all-in-one policy indemnifies for loss arising out of fire, burglary, theft and third party risks. The policyholder may also get paid for the loss of profits incurred due to fire till the time the business remains shut. Valued policy: This policy is a departure from the standard contract of indemnity. The amount of indemnity is fixed and the actual loss is not taken into consideration. Floating policy: This policy is subject to the ‘average clause’. The extent of coverage expands to different properties belonging to the policyholder under the same contract and one premium. The policy may also provide protection to goods kept at two different stores. Replacement or Re-instatement policy: This policy is subject to the re-instatement clause, which requires the insurance company to pay for replacing the damaged property. So, instead of giving out cash, the insurer can re-instate the property as an alternative option.
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Why does one need Fire Insurance? Fire insurance is important because a disaster can occur at any time. There could be many factors behind a fire, for example arson, natural elements, faulty wiring, etc. Some facts that stress the importance of fire insurance include: ? ? ? ? Fire contributes to the maximum number of deaths occurring in America due to natural disasters. Eight out of ten fire deaths take place at home. A residential fire takes place after every 77 seconds. The major reason for a residential fire is unattended cooking.
Fire Insurance Claim Procedure:
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Individuals/corporate must inform insurer as early as possible, in no case later than 24 hours. Provide relevant information to the surveyor/claim representative appointed by the insurer. The surveyor then analyzes the extent/ value of loss or damage.
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The claim process takes anywhere between one to three weeks.
Documents Required for Fire Insurance Claim: 1. 2. 3. 4. 5. True copy of the policy along with schedule. Report of fire brigade. Claim Form Photographs Past claims experience
BASIS OF INDEMNITY In case of a loss/damage the following two broad categories of assessment can be done. 1. In case of Partial Loss: The insurers pay for the repair cost, freight and Insurance to and the repair workshop, dismantling and re-erection charges. In case of in house repair a reasonable amount of overheads is paid for. 2. In case of total loss: the Insurers pay for the new replacement cost of identical machine of the same capacity and model. This gives the Gross Loss. Thereafter the Net loss is computed as hereunder : GROSS LOSS Depreciation ( to be considered only in case S.I. is fixed on Market value basis) Salvage Under Insurance Excess Net Claim payable
Less Less Less Less =
General rules/laws/cases withheld, regarding claims settlement, by Consumer Protection Act: Numerous persons have resentment against the Insurance Companies for the non-Payment of their claims and are unsatisfied with the long drawn legal battles. The Consumer Protection Act has brought a satisfaction in the general masses as it speaks and provides for compensation to the effected citizen in place of only according punishment. Little is known of the concept and the findings of the Consumer Courts, which has multiplied the number of litigations before it, resulting to delayed decisions.
1. An Insurance policy is issued after the acceptance of the proposal and after the first premium has been honored by the Company, the contract for insurance is accepted. Once a certificate of insurance has been issued the insurer has to satisfy any decree of a claim arising out of the said policy. 2. If a policy is taken on a particular date and time, it becomes effectiveness accordingly. If the premium has been paid by cheque and it has been dishonored the policy becomes nonexistent. 3. A complaint for a direction for settlement of claim can be filed even after receiving 75% of the claimed amount under protest but a second complaint on the same cause of action
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is not maintainable, when the earlier complaint has been allowed and the right of the complainant under the insurance policy has been awarded. 4. Jurisdiction under the Consumer Protection Act after the amendment is prospective in nature and remittance of money or writing of letter from a place will not give the District Forum of the concerned place to hear consumer dispute. 5. The Supreme Court holds that the insurer has a duty to act in good faith, which obliges him to enter into contract without concealing any material fact. After entering into the contract no material alteration can be made by the insurer in terms of the contract without the consent of the insured and its liability would depend upon the terms of the policy. 6. An insured is entitled for compensation for inordinate delay in settlement of claim and if the Complaint is found to be frivolous and vexatious the complainant will have to pay cost to the opposite party. 7. A decision taken by the Insurance Company in good faith or without duly adverting to any other relevant aspect that are materials for arriving at a proper decision on the claim cannot be taken as deficiency of service as it is not acceptable to the insured and repudiation of claim on the ground of suppression of material facts and nonpayment of premium is no deficiency of service. 8. Deficiency of service cannot be claimed as there is nothing to show that the claim amount taken as final settlement was under protect and a decision on the claim taken after due application of the mind, it cannot be said that it is deficiency of service if the complaint alleging amount assessed is grossly inadequate 9. The Complainant is not entitled to interest if the insurance company has offered to pay the compensation and he has refused to accept the same. Conference of a double benefit by awarding both interest as well as lump sum compensation is not justified in law. 10. Further if the policy shows that the Insurer will indemnify the insured against the loss or damage "by accidental external means". Landslide, caving in of the road comes within the scope of the definition of accidental external means repudiating a claim on the ground that such risk not covered amounts to deficiency of service. 11. Goods Carriage Vehicle under the insurance policy condition cannot carry passengers if carried it will amount to violation of the terms of insurance policy by the insured repudiating the claim cannot be held to be deficiency of service. Similarly at the time of the accident if the vehicle in question was over loaded and that has been proved repudiation of claim cannot be challenged. 12. An insured vehicle fell into river due to landslide. The policy carried a clause covering loss by external means. The insurer refused to pay saying that such type of risk as not covered by the policy. It was held that this clause was capable of covering the type of events which happened in the case and therefore, the repudiation was not justified. 13. The carrying of passengers in a car not described as a taxi was held not defeat the policy because the premium for both types of the cars was the same. 14. Where the vehicle insured for personal use was under hire at the time of the accident, refusal of the claim was held to be justified. 15. Where the possession of the insured motor vehicle was changed from that of hire purchaser to the financier and this fact was not brought to the notice of the insurer, the latter was held not liable for the consequences of an accident.
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16. The transferee of the original owner claimed insurance money covered under comprehensive insurance policy. Transferee did not get any ovation of contract of insurance. It was held that the transferee was not entitled for any compensation. 17. Enhancement of Insurance money: The van was admitted stolen on the night intervening 12th and 13th august 1991. The information regarding the theft was lodged with the police station early in the morning on 13th august 1991. No information regarding theft of the van was given by the complainant to the insurance company on the same day. When the letter for enhancing the insurance money had been given on 12th august 1991 in the evening, it had been the duty of the complainant to have given the information regarding theft to the insurance company on 13th august 1991. However, it was given on 14th august 1991. This crucial delay of one day has also not been explained in the affidavit. It is not disputed that the complainant’s father is assistant divisional manager in another branch. He exercised his position status, in collusion with the branch manager, where the van was insured, to manipulate that the letter of enhancement of the insurance money was received by the manager on 12 august 1991. This was done to defraud the Insurance Company and benefit the complainant. After taking the facts into the view, the commission is of the view that the claimant is not entitled to the amount of Rs 1, 62,000 as claimed by him and the claim has rightly been repudiated by the insurance company.
Supreme Court judgments:
Oriental Insurance Company Limited vs. Sudhakaran K.V. & Ors. - Pillion Rider Case
Judgment of the above noted case bearing Appeal (civil) No. 3634 of 2008 was delivered by the bench of Supreme Court of India comprising of Mr. S. B. Sinha J. and Mr. Lokeshwar Singh Panta J. on May 16, 2008. The significant question in law involved in the case was whether pillion rider would come within the coverage of the third party insurance policy (Act policy mandatory under Motor Vehicle Act)? The appeal in question was directed against a judgment and order dated 22.3.2006 passed by the High Court of Kerala at Ernakulam in M.F.A. No. 536 of 1999 whereby the appeal preferred by the appellant from the judgment and award dated 31.10.1998 passed by the Motor Accident Claims Tribunal, Perumbavoor awarding a sum of Rs.1,18,900/-(Rupees One lakh eighteen thousand and nine hundred only) together with interest thereon at the rate of 12% p.a. from the date of the filing of the claim petition till date of realization of the amount against the appellant as also against the owners of the vehicle was dismissed. The court observed that in terms of Section 147 of the Motor Vehicle Act only in regard to reimbursement of the claim to a third party, a contract of insurance must be taken by the owners of the vehicle. It is imperative in nature. When, however, an owner of a vehicle intends to cover himself from other risks; it is permissible to enter into a contract of insurance in which event the insurer would be bound to reimburse
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the owner of the vehicle strictly in terms thereof. The liability of the insurer to reimburse the owner in respect of a claim made by the third party, thus, is statutory whereas other claims are not. The court further relied on New India Assurance Co. Ltd. v. Asha Rani (2003) 2 SCC 223, in which it was categorically held that a gratuitous passenger in a goods carriage would not be covered by a contract of insurance entered into by and between the insurer and the owner of the vehicle in terms of Section 147 of the Motor Vehicle Act. The court also relied on United India Insurance Co. Ltd., Shimla v. Tilak Singh and Ors. [(2006) 4 SCC 404], whereby the above principle was extended to all other categories of vehicles also, stating as under: "In our view, although the observations made in Asha Rani case were in connection with carrying passengers in a goods vehicle, the same would apply with equal force to gratuitous passengers in any other vehicle also. Thus, we must uphold the contention of the appellant Insurance Company that it owed no liability towards the injuries suffered by the deceased Rajinder Singh who was a pillion rider, as the insurance policy was a statutory policy, and hence it did not cover the risk of death of or bodily injury to a gratuitous passenger." After considering the law as emerging from the various decisions, the court held that: i. The liability of the insurance company in a case of third party insurance is not extended to a pillion rider of the motor vehicle unless the requisite amount of additional premium is paid for covering his/her risk. The legal obligation arising under Section 147 of the Act cannot be extended to an injury or death of the owner of vehicle or the pillion rider. The pillion rider in a two wheeler can not to be treated as a third party when the accident has taken place owing to rash and negligent riding of the scooter and not on the part of the driver of another vehicle.
ii. iii.
Accordingly, appeal was allowed. For getting complete judement as pronounced by the court, please follow link below:http://judis.nic.in/supremecourt/qrydisp.aspx?filename=31612
Kandimalla Raghavaiah and Company vs National Insurance Company [SUPREME COURT OF INDIA, 10 Jul 2009] Consumer Protection - Insurance claim - Accrual of cause of action - Term "cause of action" has different meanings in different contexts, that is when used in context of territorial jurisdiction or limitation or accrual of right to sue - Described as "bundle of facts", which if proved or admitted entitle plaintiff to relief prayed for - Pithily stated, "cause of action" means cause of action for which suit is brought "Cause of action" is cause of action which gives occasion for and forms foundation of suit - In context of limitation with reference to a fire insurance policy, undoubtedly, date of accrual of cause of action has to be date on which fire breaks out - Appeal dismissed.
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Insurance - Consumer Protection - Consumer Protection Act, 1986, ss. 23, 24A - Deficiency in service Limitation period - Non-settlement of insurance claims - Appellant firm took a Fire Policy 'C' with National Insurance Company - Fire broke out in godowns - Insurance Company denied factum of fire and refused to issue 'claim form' on ground that claim had become time-barred - Whether complaint was barred by limitation? - Section 24A of Act bars any fora set up under Act, from admitting a complaint, unless complaint is filed within two years from date of which cause of action has arisen Cause of action in respect of special insurance policy arose on 22nd/23rd March, 1988, when fire in godown took place damaging tobacco stocks hypothecated with Bank in whose account policy had been taken by appellant - First action by appellant was in November 1992 i.e., after a gap of 4 years, when appellant asked for claim form - Limitation for purpose of Section 24A of Act began to run from 23-031988 and therefore, complaint before Commission against Insurance Company for deficiency in service, whether for non issue of claim forms or for not processing claim under policy, ought to have been filed within two years thereof - Held, only on 6-11-1992 they, for the first time, asked for supply of "claim forms" in order to prefer a claim and by that time period of limitation for the purpose of Section 24A of the Act had expired - Complaint was filed on or after 24-10-1997, which was clearly barred by time Further held, it cannot be said that Insurance Company's reply dated 21-03-1996 to legal notice dated 401-1996, declining to issue forms for preferring a claim after a lapse of more than four years of date of fire, resulted in extending period of limitation for purpose of Section 24A of Act - Complaint filed on 24t10-1997 and that too without an application for condonation of delay was manifestly barred by limitation - Appeal dismissed.
Satwant Kaur Sandhu vs New India Assurance Company Limited [SUPREME COURT OF INDIA, 10 Jul 2009]
[A] Insurance - Material fact - Meaning of - Term "material fact" is not defined in Act - In general terms it means as any fact which would influence judgment of a prudent insurer in fixing premium or determining whether he would like to accept risk - Held, in a Contract of Insurance, any fact which would influence mind of a prudent insurer in deciding whether to accept or not to accept risk is a "material fact" - Appeal dismissed.
Insurance - Insurance Act, 1938, s. 45 – Medical claim policy - Applicability of s. 45 - S. 45 places restrictions on right of insurer to call in question a life insurance policy on ground of mis-statement after a particular period - Said provision applies only in a case of life insurance policy - Present case relates to a medical claim policy – Medical claim policy is a non-life insurance policy meant to assure policy holder in respect of certain expenses pertaining to injury, accidents or hospitalizations - Held, section 45 has no application on facts of present case - Appeal dismissed.
[C] Consumer Protection - Insurance – Medical claim policy - Repudiation of - Misrepresentation and suppression of material facts regarding health made by policy holder - Non-disclosure of fact in proposal form at time of taking out medical claim policy, that policy holder was suffering from chronic Diabetes and Renal failure fact - Whether factum of said illness was a "material" fact for purpose of a medical claim policy and its non-disclosure was tantamount to suppression of material facts enabling Insurance Company to repudiate its liability under policy? - Medical claim is a contract of insurance falling in category of contract uberrimae fidei, meaning a contract of utmost good faith on part of assured - When
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an information on a specific aspect is asked for in proposal form, an assured is under a solemn obligation to make a true and full disclosure of information on subject which is within his knowledge - Any inaccurate answer will entitle insurer to repudiate his liability because there is clear presumption that any information sought for in proposal form is material for purpose of entering into a Contract of Insurance Held, statement made by insured in proposal form as to state of his health was palpably untrue to his knowledge - There was clear suppression of material facts in regard to health of insured and, therefore, respondent-insurer was fully justified in repudiating insurance contract - Appeal dismissed.
New India Assurance Company Limited vs. Suresh Chandra Aggarwal [SUPREME COURT OF INDIA, 10 Jul 2009]
Consumer Protection - Insurance - Motor Vehicles Act, 1988, section 3(1), 5, 15 - Insurance claim Repudiation of - No valid driving license at relevant time - Claimant insured his car - Insured vehicle met with an accident - Claimed lodged - Claimed repudiated on the ground that the driver of the vehicle was not holding an effective driving license at the time of accident. Driving license of the deceased driver had expired on 25-10-1991 i.e. four months prior to the date of accident and it was renewed w.e.f. 23-03-1992. State Commission observed that as license had been renewed subsequently and since driver had not been disqualified to hold such a license, the claim of the claimant could not be rejected on the ground that the license had not been renewed on time. Whether State Commission right in holding that driver of the insured vehicle had an effective driving licensee at the time of the accident? In case application for renewal is filed after more than 30 days after the date of its expiry, proviso to subsection (1) of section 15 of the Act, gets attracted and the license is renewed only w.e.f the date of its renewal, meaning thereby that in the interregnum between the date of expiry of the license and the date of its renewal, there is no effective license in existence. In the present case, the application for renewal of license was not filed within 30 days from the date of its expiry. Therefore, deceased driver did not hold an effective driving license, as required in the terms and conditions governing the policy on the date of accident. Further held, in view of the clear mandate of section 3 of the Act, the deceased driver was not even permitted to drive the insured vehicle in a public place. Claimant violated the provisions of section 5 of the Act by entrusting the vehicle to a person who did not hold a valid license on the date of the accident. Appellant was not liable to indemnify the claimant for the loss suffered by him in the accident of the insured vehicle - Impugned order set aside - Appeal allowed.
doc_742201519.docx
Describes different types of general insurance like home insurance, travel insurance, auto insurance, fire insurance and basics of indemnity.
Business Law Assignment – General Insurance
General Insurance
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General Insurance
Insurance other than ‘Life Insurance’ falls under the category of General Insurance. General Insurance comprises of insurance of property against fire, burglary etc, personal insurance such as Accident and Health Insurance, and liability insurance which covers legal liabilities. Various Types of General Insurance:
Home Insurance
Every man has a dream to own a house one day. For an ordinary person it takes a whole lifetime of savings to build a house. And one cannot predict a natural calamity Hence home insurance is very important. Home insurance policy available in the market covers broadly two things:
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Building structure Contents inside the home
Insurance Covers for a Building Structure 1. The Fire and Special Perils Cover This is a comprehensive packaged cover that covers damages to the structure of home due to
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Fire Storm, tempest, flood & inundation Riot, strike & malicious damage Lightning Explosion & implosion Aircraft damage Damage due to impact by vehicles Subsidence, landslides and rockslides Bursting and/or overflowing of water tanks, apparatus and pipes Missile testing operation Leakage from automatic Sprinkler installations Bush fire
2. Earthquake Cover: Covers damages to the structure of your house due to earthquake 3. Terrorism Cover: Covers damages to the structure of your house due to acts of terrorism. A home insurance does not cover the market value of the home. The price of the home includes the cost of the land and the cost of constructing the building structure on this land and the land cannot be insured.
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The insurance cover is only for the cost of constructing the building. The sum insured is calculated by multiplying your home area by the construction rate per sq. feet. Insurance Cover for Contents inside the Home This cover is only for damages or loss of the contents inside the home -electronic and electrical goods, furniture and fixtures, clothing, jewelry and any other contents inside the home. The covers that can be taken for the contents are as follows:
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The Fire and Specials Perils Cover Earthquake Cover Burglary Loss / damage to contents due to burglary or an attempted burglary Loss of jewelry, gold ornaments, silver articles and precious stones kept under lock & key
All the contents are covered on the market value of the items. This means that if there is a loss, the claim would be paid on the value of purchasing a similar new item, minus depreciation Householders' package policy The Householders' package policy is a policy which offers covers that are suitable for a household. Instead of taking different policies the client can opt for multiple sections or covers of his choice under one policy. There are ten sections under the Householders' package policy: Section I Section II Section III Section IV Section V Section VI Section VII Section VIII Section IX Section X Fire & Allied Perils Burglary & Housebreaking including larceny or theft (Contents only) All Risks Plate Glass Breakdown of domestic appliances Television sets & VCR / VCP/ VCD Pedal cycle Baggage Personal Accident Public Liability Risks and Workmen's Compensation Risks
Only section I B (fire) for contents is compulsory. In addition, two more sections need to be covered under the Householders' package policy. If a client selects more than four sections, a discount of 15 percent is available. If he selects more than six sections, a discount of 20 percent is available on the nontariff sections Under the Householders' Package policy - Fire, public liability, workmen's compensation are tariff sections while the rest are non-tariff sections. There is NO limit on the amount of cover that can
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be availed of under the Householders' Package policy. A single amount can be taken for all the contents only if the value of any single item exceeds 5 percent of the amount of insurance and the same is to be declared separately otherwise the value of that item will be considered of a maximum of 5 percent. Under the Householders' Package policy, jewellery should be listed individually along with the values. Jewellery lying in bank vaults be covered under the Householders' Package policy The Householders' Package policy can be issued for a maximum period of one year Householder's Insurance policy: Householder's Insurance policy is designed to cover risks and contingencies faced by householders under a single package policy. It provides protection for property and interests as well as legal liability of the insured and his/her family members who permanently reside with the insured. The premium rate for the Householder's Insurance policy is calculated at 0.65 per thousand rupees value of the Capital Sum Insured. The Capital Sum Insured is derived at the time of commencement of the policy from the Market Value of the property. Electronic items, computers and their peripherals, dish antennae are not covered under the Householder's Insurance policy. A separate Electronic Equipment policy must be implemented to provide cover for them. Exceptions against cover within the preview of the Householder's Insurance Policy: The householder's Insurance policy, any loss or damage suffered to the following is treated as an exception and cannot be claimed.
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Consumable articles Money Securities Stamps Stamp collection Bullion Livestock Motor vehicles Pedal cycle Deeds Bonds Bills of exchange Promissory notes Shares Books Manuscripts Loose precious stones Jewellery and valuables
Exceptions for cover towards Plate Glass under the Householder's Insurance policy: Householder's Insurance policy, the exceptions for cover of Plate Glass are
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Breakage during removal Alterations and/or repairs
Breakage of lettering
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Frames and frameworks Disfiguring or scratching for damage of glass other than fracture extending through the entire thickness of glass
Premium Payable for Plate Glass is calculated at 10 percent of the Actual Value of the Plate Glass. Premium Payable for Television sets and VCRs is calculated at 10.05 percent of the Market value. Perils against which Television sets and VCRs are insured the loss and/or damage that might arise from
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Fire and allied perils Burglary Housebreaking or theft Accidental external means and Mechanical or domestic breakdown
The admissible legal liability for damage to the insured's own surrounding property due to collapse of antenna is limited to Rs.25000/-
Travel Insurance
Policy covers financial risks that may occur due to:
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Trip Cancellation/Interruption Medical emergency Hijack Personal accident Events like delay or missed departure Delayed arrival or Loss of baggage Passport loss and legal expenses Loss of cash, or valuables
Main Features of Travel Insurance Policies Available in India
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Policy is available for all ages between 1 – 70 years and senior citizens between 71 and 85 years. They cover trips from as short as 7 days to 180 days. Offer various coverage options ranging from US $ 50,000 to US $ 500,000. Premium is generally payable on a pay per day basis and not on slab rates. Pre-existing ailments and maternity usually are excluded Generally, no health-check up is required up to 70 years of age. Additional coverage’s that can be included in the basic travel policy are: dental treatment, medical evacuation, repatriation, baggage loss/delay, trip cancellation and interruption, etc
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For frequent international travelers, Multi-Trip Plan is available. The policy is valid for 1 year and one can choose between 2 options of 30 or 45 days as the maximum duration per trip. Baggage Insurance is insurance that covers the loss or damages to personal baggage of the policyholder or his family members due to fire, theft or accident during the course of journey anywhere in India including stoppage enroute. Executive Travel Policy: Any Indian National over the age of 18 years residing in India is entitled for Executive Travel Policy against risks during their travel overseas and within India on the following basis:
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Travel Overseas - All 24 hours during the covered trip up to 60 days only Travel Within India - Travels by commercial plane as a ticketed passenger by train / licensed coach / taxi including private taxi, outstation use of company car and while as a pedestrian but excluding two wheelers or the public road transport system.
Maximum indemnity available under the Executive Travel Policy In case of personal accident, the maximum limit of indemnity is Rs.30 lakhs. In case of loss of checked baggage outside India, the maximum limit of indemnity is Rs.75, 000/- and within India it is Rs.40, 000/Suhana Safar Policy: All domestic travelers can opt for this policy. It covers the risk of accident to the policyholder, spouse and dependent children and loss of baggage during the period of his outstation travel within India. Maximum liability available for personal accident is Rs.1, 00,000 per person and liability for loss of baggage is limited to Rs.15, 000/- where the number of people covered is 4. Period of insurance coverage available under this package is for a single round trip to all the declared places (including places enroute) up to the scheduled date of return. The policy cover is available for trips up to 60 days only. However the policy can be extended to cover further 60 days on payment of additional premium. Suhana Safar Policy This policy is specially designed to cover domestic traveler including baggage. Period of insurance is 60 days. It can be extended to further 60 days on payment of additional premium. Executive Travel Policy This policy is designed to cover Indian Nationals traveling abroad. Period of insurance is 60 days. Overseas Mediclaim Policy This policy is devised to cover people travelling abroad for business, pleasure, study and for employment. Period of insurance is 180 days for business and pleasure travel and for employment and study purpose, the policy is issued on annual basis.
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Auto Insurance
Auto insurance Is mandatory for all new vehicles, be it for commercial or personal use. Insurance Companies are coming out with comprehensive policies for its customers. They are also tying up with leading automobile manufacturers for a swift insurance process. An automobile may be insured against loss or damage by accident, fire, burglary, while in transit; third party accident etc. Auto insurance companies come out with unique plans for four wheelers, two wheelers, commercial vehicles. Types of Auto Insurance Available: ? ? ? Two Wheeler Insurance Car Insurance Commercial Vehicle Insurance
Calculation of Auto Insurance Amount/Premium: Insurance companies are providing value- added service to its client by offering them instant auto quotes. Auto premium is determined by a number of factors like, make of the vehicle, year of manufacture, place of registration, current showroom price of the vehicle and model of the vehicle. It also depends whether the client is individual or corporate etc. The amount of premium increases with the increase in the price of the vehicle. Companies renew policies after expiry. A discount on premium is sometimes provided to existing clients. Auto Insurance Coverage There are two types of car insurance - comprehensive and third party. Third-party insurance covers only damage caused by the vehicle to other people or property. These policies are valid for a year. Your car insurance company should notify you by mail when it's time to renew the policy. Risks covered by the Third Party policy: The Third Party car insurance policy covers a vehicle owner's legal liability for any compensation to be paid arising from any accident caused by the use of the vehicle. These include: ? ? Death or bodily injury to a third party person Damage to third party property
The liability is covered for an unlimited amount in case of death or injury. Damage to third party property is covered by the insurance policy as follows - up to Rs. 1 lakh for private vehicles, scooters, and motorcycles and up to Rs.7.5 lakhs for commercial vehicles. Comprehensive insurance covers risk arising out of theft or damage to the vehicle, death of the driver and/or passengers in the vehicle, and damage caused by the vehicle to other people or property. Risks covered by the Comprehensive policy:
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In addition to the cover provided by the Third Party car insurance plan, the Comprehensive insurance policy protects you against any loss or damage caused to the vehicle and its insured accessories due to natural and man-made calamities. These include: ? ? Natural calamities, such as fire, explosion, self ignition or lightning, flood, typhoon, hurricane, storm, tempest, inundation, cyclone, hailstorm, frost, landslide, rockslide, and fire and shock damage due to earthquake Man-made calamities, such as burglary, housebreaking or theft, riot or strike, accident by external means, malicious act, terrorist activity and damage during travel by road, rail, inland-waterway, air, or elevator
This policy also includes personal accident cover, which provides compulsory accident cover for the owner of the vehicle while driving. The owner can also avail personal accident cover for passengers in the vehicle. Another mandatory feature is the third party legal liability cover - it protects the owner against legal liability arising from an accident causing any permanent injury or death as well as any property damage. This insurance policy also pays for towing charges from the place of accident to the workshop, subject to a maximum of Rs.300/- for scooters and motorcycles and Rs.1,500/- for private cars and commercial vehicles. Also available is a restricted cover for fire and theft - only for vehicles that are laid up in a garage and not in active use. Apart from the optional covers available in the Comprehensive car insurance policy, there are some extension covers on the insurance that can be purchased. These include: ? ? ? Loss or damage of accessories fitted in the vehicle such as stereo, fan, air-conditioner, etc. Personal accident cover under private car policies for passengers and drivers Legal liability to be paid to employees or non-fare paying passengers in commercial vehicles
Different types of Personal Accident Covers available for drivers and passengers: An owner-driver of a private car is provided car insurance with personal accident cover of up to Rs. 2 lakhs while the owner-driver of a two-wheeler is covered for Rs. 1 lakh. A personal accident insurance cover can also be purchased at an additional cost to cover employed drivers and persons traveling in the vehicle, on a named as well as unnamed basis. Duration of Insurance: Your vehicle has to be insured at all times. This is required by law. All car insurance plans are annual policies issued for a period of twelve months. Therefore, you need to know when your insurance renewal is coming up. However, an extension for less than 12 months or a policy for a short period can be provided with special approval from a competent authority in the car insurance company.
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A car insurance policy has to be renewed before the expiry of the ongoing term of insurance. Delay in renewing a policy and thereby driving a vehicle without valid motor insurance is illegal and there are substantial penalties. Here are some scenarios where you will lose out:
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In case the uninsured vehicle has an accident, the insurance company is not liable and you would have to bear the liabilities alone, if any. If the policy is not renewed within 90 days of the expiry date of the previous policy, the No Claim Bonus cannot be claimed. If the policy expires and is not renewed on time, the insurance company will insist on a physical inspection of the vehicle before granting renewal.
Private cars that are over 15 years old are normally not considered for comprehensive cover. For vehicles between 10 and 15 years old, car insurance insurers insist on an inspection report from a surveyor certifying the condition of the vehicle. Motorcycles and commercial vehicles over 10 years old are normally not granted comprehensive insurance cover. However, remember that no age limit exists for purchasing the Third Party cover, which is a mandatory requirement for all vehicles. Auto insurance Claims Procedure: Auto insurance claims can be accidental, theft claims or third party claims.
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Insured should write the number of the other vehicle in case of an accident or third party claim Names of witness should also be written down File an FIR with the nearest police station Insured should then contact the insurance company and get a claim number A surveyor is appointed who reports the approximate value of loss or damage Based on the report of the surveyor, insurance companies try to send the amount to the insured within one to three weeks An individual might have to pay the repair charges himself and later get it reimbursed
Documents Required for Auto Insurance Claim: For Accident Claims: 1. 2. 3. 4. 5. 6. Claim form duly signed RC copy of the vehicle Driving license copy FIR on a case-to-case basis Original estimate Original repair invoice, payment receipt from the service center
For Third Party Claims: 1. 2. 3. 4. 5. Claim form duly signed RC copy of the vehicle Driving license copy Original policy copy Original FIR copy
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6. RTO transfer papers duly signed, mentioning that the vehicle cannot be located Steps after one has submitted the claim form for his damaged vehicle 1. After you submit your claim form and the relevant documents, the insurer appoints a surveyor to inspect your vehicle and submit his/her report to the insurance company. You also get the details of the surveyor's report. In case of major damage to the vehicle, the insurer arranges for a spot survey at the site of accident. 2. You can undertake repairs only on completion of the survey. Once the vehicle is repaired, you submit duly signed bills/cash memos to the insurance company. 3. Some companies have the surveyor re-inspect the vehicle after repairs. In such a scenario, you pay the workshop/garage and obtain a proof of release document (this is an authenticated document signed by you to release the vehicle from the garage after it is checked and repaired). 4. Once the vehicle has been released, you then submit the original bill, proof of release, and cash receipt from the garage to the surveyor. The surveyor sends the claim file to the insurance company for settlement along with all the documents. 5. Finally, the insurance company reimburses you. Relevant information: What if the accident takes place in a city other than where the motor insurance policy was issued? It does not matter where the accident takes place; if your motor insurance policy is in force, you remain insured throughout the country. How much would the insurance company pay in the event of an accident? In case of an accident, the insurance company pays for the replacement of the damaged parts and the labor fees. The costs that you have to bear include: ? ? ? ? The amount of depreciation as per the rate prescribed Reasonable value of salvage (if not repaired at the outlet) Voluntary deductions under the policy, if you have opted for any Compulsory excesses levied by the insurer
Will the insurance company pay an advance on the basis of a damage estimate? This practice varies by company. Most companies offer a cashless claim service whereby you don't have to pay for the repairs - the company handles them directly. Therefore, the question of an advance does not arise. In case you choose the non-cashless service, you are reimbursed once all the repairs have been completed and the bills have been submitted to the insurance company. In such cases, if you are unable to pay the entire charges, you need to inform the insurance agent and the insurer will make the balance payment.
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Can one produce bills at the end of the year and claim for small repairs carried out? No, a claim has to necessarily be lodged immediately - you cannot accumulate them. Thus, bills for small repairs accrued over the period of insurance will not be reimbursed by the insurer. Who bears the towing charges? Comprehensive insurance policies provide for towing charges from the place of accident to the workshop (subject to a maximum of Rs.300 for scooters and motorcycles and Rs.1500 for private cars and commercial vehicles). You can also opt for higher towing charges by paying extra premium. On your request for towing services in the event of an accident, the insurance company will pay up to the maximum limit specified or the actual amount spent, whichever is lower. Steps if one receives a Court notice from a third party claimant: In the event of a third party claim, notify the insurance company in writing along with a copy of the notice and your insurance certificate. DO NOT offer to make an out-of-court settlement or promise payment to any party without the written consent of the insurance company. The insurance company has a right to refuse liabilities arising out of such promises. The insurance company will issue a claim form that has to be filled and submitted along with: ? ? ? Copy of the Registration Certificate Driving license First information report (FIR)
After verification, the insurance company will appoint a lawyer in your defense. You are expected cooperate with the insurance company, providing evidence during court proceedings. If the court orders compensation on your part, the insurance company will then do it directly. What if one have an accident with an uninsured vehicle? What is the extent to which one is covered? It does not matter whether the vehicle on the other side has insurance or not. If you have a comprehensive policy for your vehicle, you are fully insured against liabilities, subject to your policy specifics. If there is a dispute regarding the claim settlement between the insured and the insurer, how is the dispute resolved? The most common form of dispute that arises between the insured and the insurer is about admission of liability or the size of the claim. Disputes regarding claim amounts, where the insurer has agreed to cover the claim under the policy, are referred to an arbitrator. If the decision of the arbitrator is disputed by either party, the Consumer Forum or the Civil Court could be approached.
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Fire Insurance
A fire insurance policy involves an insurance company agreeing to pay a certain amount equivalent to the estimated loss caused by fire to the insured, within the time specified in the contract. The indemnity is subject to change depending upon the policy. One should confirm with the insurer about the types of risks covered, since one cannot insure the property against all types of risks of fire. Extent of coverage under a Fire Insurance Policy: Fire insurance provides protection for the estimated value of the physical house. However, there are a number of exclusions to the same, for example medical bills, loss of human life and pets, loss of personal belongings, structures outside the property (including garages and gazebos), damage to the landscape and expenses for accommodation for the time being. These things can be covered under a package of extended property insurance. Main types of Fire Insurance policies: ? Specific Policy: The insurer is liable to pay a set amount lesser than the property’s real value. In this policy, the property’s actual value is not considered to determine the indemnity. The average clause, which requires the insured to bear the loss to some extent, does not play a role in this policy. In case the insurer inserts the clause, the policy will be known as an average policy. Comprehensive policy: This all-in-one policy indemnifies for loss arising out of fire, burglary, theft and third party risks. The policyholder may also get paid for the loss of profits incurred due to fire till the time the business remains shut. Valued policy: This policy is a departure from the standard contract of indemnity. The amount of indemnity is fixed and the actual loss is not taken into consideration. Floating policy: This policy is subject to the ‘average clause’. The extent of coverage expands to different properties belonging to the policyholder under the same contract and one premium. The policy may also provide protection to goods kept at two different stores. Replacement or Re-instatement policy: This policy is subject to the re-instatement clause, which requires the insurance company to pay for replacing the damaged property. So, instead of giving out cash, the insurer can re-instate the property as an alternative option.
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Why does one need Fire Insurance? Fire insurance is important because a disaster can occur at any time. There could be many factors behind a fire, for example arson, natural elements, faulty wiring, etc. Some facts that stress the importance of fire insurance include: ? ? ? ? Fire contributes to the maximum number of deaths occurring in America due to natural disasters. Eight out of ten fire deaths take place at home. A residential fire takes place after every 77 seconds. The major reason for a residential fire is unattended cooking.
Fire Insurance Claim Procedure:
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Individuals/corporate must inform insurer as early as possible, in no case later than 24 hours. Provide relevant information to the surveyor/claim representative appointed by the insurer. The surveyor then analyzes the extent/ value of loss or damage.
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The claim process takes anywhere between one to three weeks.
Documents Required for Fire Insurance Claim: 1. 2. 3. 4. 5. True copy of the policy along with schedule. Report of fire brigade. Claim Form Photographs Past claims experience
BASIS OF INDEMNITY In case of a loss/damage the following two broad categories of assessment can be done. 1. In case of Partial Loss: The insurers pay for the repair cost, freight and Insurance to and the repair workshop, dismantling and re-erection charges. In case of in house repair a reasonable amount of overheads is paid for. 2. In case of total loss: the Insurers pay for the new replacement cost of identical machine of the same capacity and model. This gives the Gross Loss. Thereafter the Net loss is computed as hereunder : GROSS LOSS Depreciation ( to be considered only in case S.I. is fixed on Market value basis) Salvage Under Insurance Excess Net Claim payable
Less Less Less Less =
General rules/laws/cases withheld, regarding claims settlement, by Consumer Protection Act: Numerous persons have resentment against the Insurance Companies for the non-Payment of their claims and are unsatisfied with the long drawn legal battles. The Consumer Protection Act has brought a satisfaction in the general masses as it speaks and provides for compensation to the effected citizen in place of only according punishment. Little is known of the concept and the findings of the Consumer Courts, which has multiplied the number of litigations before it, resulting to delayed decisions.
1. An Insurance policy is issued after the acceptance of the proposal and after the first premium has been honored by the Company, the contract for insurance is accepted. Once a certificate of insurance has been issued the insurer has to satisfy any decree of a claim arising out of the said policy. 2. If a policy is taken on a particular date and time, it becomes effectiveness accordingly. If the premium has been paid by cheque and it has been dishonored the policy becomes nonexistent. 3. A complaint for a direction for settlement of claim can be filed even after receiving 75% of the claimed amount under protest but a second complaint on the same cause of action
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is not maintainable, when the earlier complaint has been allowed and the right of the complainant under the insurance policy has been awarded. 4. Jurisdiction under the Consumer Protection Act after the amendment is prospective in nature and remittance of money or writing of letter from a place will not give the District Forum of the concerned place to hear consumer dispute. 5. The Supreme Court holds that the insurer has a duty to act in good faith, which obliges him to enter into contract without concealing any material fact. After entering into the contract no material alteration can be made by the insurer in terms of the contract without the consent of the insured and its liability would depend upon the terms of the policy. 6. An insured is entitled for compensation for inordinate delay in settlement of claim and if the Complaint is found to be frivolous and vexatious the complainant will have to pay cost to the opposite party. 7. A decision taken by the Insurance Company in good faith or without duly adverting to any other relevant aspect that are materials for arriving at a proper decision on the claim cannot be taken as deficiency of service as it is not acceptable to the insured and repudiation of claim on the ground of suppression of material facts and nonpayment of premium is no deficiency of service. 8. Deficiency of service cannot be claimed as there is nothing to show that the claim amount taken as final settlement was under protect and a decision on the claim taken after due application of the mind, it cannot be said that it is deficiency of service if the complaint alleging amount assessed is grossly inadequate 9. The Complainant is not entitled to interest if the insurance company has offered to pay the compensation and he has refused to accept the same. Conference of a double benefit by awarding both interest as well as lump sum compensation is not justified in law. 10. Further if the policy shows that the Insurer will indemnify the insured against the loss or damage "by accidental external means". Landslide, caving in of the road comes within the scope of the definition of accidental external means repudiating a claim on the ground that such risk not covered amounts to deficiency of service. 11. Goods Carriage Vehicle under the insurance policy condition cannot carry passengers if carried it will amount to violation of the terms of insurance policy by the insured repudiating the claim cannot be held to be deficiency of service. Similarly at the time of the accident if the vehicle in question was over loaded and that has been proved repudiation of claim cannot be challenged. 12. An insured vehicle fell into river due to landslide. The policy carried a clause covering loss by external means. The insurer refused to pay saying that such type of risk as not covered by the policy. It was held that this clause was capable of covering the type of events which happened in the case and therefore, the repudiation was not justified. 13. The carrying of passengers in a car not described as a taxi was held not defeat the policy because the premium for both types of the cars was the same. 14. Where the vehicle insured for personal use was under hire at the time of the accident, refusal of the claim was held to be justified. 15. Where the possession of the insured motor vehicle was changed from that of hire purchaser to the financier and this fact was not brought to the notice of the insurer, the latter was held not liable for the consequences of an accident.
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16. The transferee of the original owner claimed insurance money covered under comprehensive insurance policy. Transferee did not get any ovation of contract of insurance. It was held that the transferee was not entitled for any compensation. 17. Enhancement of Insurance money: The van was admitted stolen on the night intervening 12th and 13th august 1991. The information regarding the theft was lodged with the police station early in the morning on 13th august 1991. No information regarding theft of the van was given by the complainant to the insurance company on the same day. When the letter for enhancing the insurance money had been given on 12th august 1991 in the evening, it had been the duty of the complainant to have given the information regarding theft to the insurance company on 13th august 1991. However, it was given on 14th august 1991. This crucial delay of one day has also not been explained in the affidavit. It is not disputed that the complainant’s father is assistant divisional manager in another branch. He exercised his position status, in collusion with the branch manager, where the van was insured, to manipulate that the letter of enhancement of the insurance money was received by the manager on 12 august 1991. This was done to defraud the Insurance Company and benefit the complainant. After taking the facts into the view, the commission is of the view that the claimant is not entitled to the amount of Rs 1, 62,000 as claimed by him and the claim has rightly been repudiated by the insurance company.
Supreme Court judgments:
Oriental Insurance Company Limited vs. Sudhakaran K.V. & Ors. - Pillion Rider Case
Judgment of the above noted case bearing Appeal (civil) No. 3634 of 2008 was delivered by the bench of Supreme Court of India comprising of Mr. S. B. Sinha J. and Mr. Lokeshwar Singh Panta J. on May 16, 2008. The significant question in law involved in the case was whether pillion rider would come within the coverage of the third party insurance policy (Act policy mandatory under Motor Vehicle Act)? The appeal in question was directed against a judgment and order dated 22.3.2006 passed by the High Court of Kerala at Ernakulam in M.F.A. No. 536 of 1999 whereby the appeal preferred by the appellant from the judgment and award dated 31.10.1998 passed by the Motor Accident Claims Tribunal, Perumbavoor awarding a sum of Rs.1,18,900/-(Rupees One lakh eighteen thousand and nine hundred only) together with interest thereon at the rate of 12% p.a. from the date of the filing of the claim petition till date of realization of the amount against the appellant as also against the owners of the vehicle was dismissed. The court observed that in terms of Section 147 of the Motor Vehicle Act only in regard to reimbursement of the claim to a third party, a contract of insurance must be taken by the owners of the vehicle. It is imperative in nature. When, however, an owner of a vehicle intends to cover himself from other risks; it is permissible to enter into a contract of insurance in which event the insurer would be bound to reimburse
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the owner of the vehicle strictly in terms thereof. The liability of the insurer to reimburse the owner in respect of a claim made by the third party, thus, is statutory whereas other claims are not. The court further relied on New India Assurance Co. Ltd. v. Asha Rani (2003) 2 SCC 223, in which it was categorically held that a gratuitous passenger in a goods carriage would not be covered by a contract of insurance entered into by and between the insurer and the owner of the vehicle in terms of Section 147 of the Motor Vehicle Act. The court also relied on United India Insurance Co. Ltd., Shimla v. Tilak Singh and Ors. [(2006) 4 SCC 404], whereby the above principle was extended to all other categories of vehicles also, stating as under: "In our view, although the observations made in Asha Rani case were in connection with carrying passengers in a goods vehicle, the same would apply with equal force to gratuitous passengers in any other vehicle also. Thus, we must uphold the contention of the appellant Insurance Company that it owed no liability towards the injuries suffered by the deceased Rajinder Singh who was a pillion rider, as the insurance policy was a statutory policy, and hence it did not cover the risk of death of or bodily injury to a gratuitous passenger." After considering the law as emerging from the various decisions, the court held that: i. The liability of the insurance company in a case of third party insurance is not extended to a pillion rider of the motor vehicle unless the requisite amount of additional premium is paid for covering his/her risk. The legal obligation arising under Section 147 of the Act cannot be extended to an injury or death of the owner of vehicle or the pillion rider. The pillion rider in a two wheeler can not to be treated as a third party when the accident has taken place owing to rash and negligent riding of the scooter and not on the part of the driver of another vehicle.
ii. iii.
Accordingly, appeal was allowed. For getting complete judement as pronounced by the court, please follow link below:http://judis.nic.in/supremecourt/qrydisp.aspx?filename=31612
Kandimalla Raghavaiah and Company vs National Insurance Company [SUPREME COURT OF INDIA, 10 Jul 2009] Consumer Protection - Insurance claim - Accrual of cause of action - Term "cause of action" has different meanings in different contexts, that is when used in context of territorial jurisdiction or limitation or accrual of right to sue - Described as "bundle of facts", which if proved or admitted entitle plaintiff to relief prayed for - Pithily stated, "cause of action" means cause of action for which suit is brought "Cause of action" is cause of action which gives occasion for and forms foundation of suit - In context of limitation with reference to a fire insurance policy, undoubtedly, date of accrual of cause of action has to be date on which fire breaks out - Appeal dismissed.
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Insurance - Consumer Protection - Consumer Protection Act, 1986, ss. 23, 24A - Deficiency in service Limitation period - Non-settlement of insurance claims - Appellant firm took a Fire Policy 'C' with National Insurance Company - Fire broke out in godowns - Insurance Company denied factum of fire and refused to issue 'claim form' on ground that claim had become time-barred - Whether complaint was barred by limitation? - Section 24A of Act bars any fora set up under Act, from admitting a complaint, unless complaint is filed within two years from date of which cause of action has arisen Cause of action in respect of special insurance policy arose on 22nd/23rd March, 1988, when fire in godown took place damaging tobacco stocks hypothecated with Bank in whose account policy had been taken by appellant - First action by appellant was in November 1992 i.e., after a gap of 4 years, when appellant asked for claim form - Limitation for purpose of Section 24A of Act began to run from 23-031988 and therefore, complaint before Commission against Insurance Company for deficiency in service, whether for non issue of claim forms or for not processing claim under policy, ought to have been filed within two years thereof - Held, only on 6-11-1992 they, for the first time, asked for supply of "claim forms" in order to prefer a claim and by that time period of limitation for the purpose of Section 24A of the Act had expired - Complaint was filed on or after 24-10-1997, which was clearly barred by time Further held, it cannot be said that Insurance Company's reply dated 21-03-1996 to legal notice dated 401-1996, declining to issue forms for preferring a claim after a lapse of more than four years of date of fire, resulted in extending period of limitation for purpose of Section 24A of Act - Complaint filed on 24t10-1997 and that too without an application for condonation of delay was manifestly barred by limitation - Appeal dismissed.
Satwant Kaur Sandhu vs New India Assurance Company Limited [SUPREME COURT OF INDIA, 10 Jul 2009]
[A] Insurance - Material fact - Meaning of - Term "material fact" is not defined in Act - In general terms it means as any fact which would influence judgment of a prudent insurer in fixing premium or determining whether he would like to accept risk - Held, in a Contract of Insurance, any fact which would influence mind of a prudent insurer in deciding whether to accept or not to accept risk is a "material fact" - Appeal dismissed.
Insurance - Insurance Act, 1938, s. 45 – Medical claim policy - Applicability of s. 45 - S. 45 places restrictions on right of insurer to call in question a life insurance policy on ground of mis-statement after a particular period - Said provision applies only in a case of life insurance policy - Present case relates to a medical claim policy – Medical claim policy is a non-life insurance policy meant to assure policy holder in respect of certain expenses pertaining to injury, accidents or hospitalizations - Held, section 45 has no application on facts of present case - Appeal dismissed.
[C] Consumer Protection - Insurance – Medical claim policy - Repudiation of - Misrepresentation and suppression of material facts regarding health made by policy holder - Non-disclosure of fact in proposal form at time of taking out medical claim policy, that policy holder was suffering from chronic Diabetes and Renal failure fact - Whether factum of said illness was a "material" fact for purpose of a medical claim policy and its non-disclosure was tantamount to suppression of material facts enabling Insurance Company to repudiate its liability under policy? - Medical claim is a contract of insurance falling in category of contract uberrimae fidei, meaning a contract of utmost good faith on part of assured - When
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an information on a specific aspect is asked for in proposal form, an assured is under a solemn obligation to make a true and full disclosure of information on subject which is within his knowledge - Any inaccurate answer will entitle insurer to repudiate his liability because there is clear presumption that any information sought for in proposal form is material for purpose of entering into a Contract of Insurance Held, statement made by insured in proposal form as to state of his health was palpably untrue to his knowledge - There was clear suppression of material facts in regard to health of insured and, therefore, respondent-insurer was fully justified in repudiating insurance contract - Appeal dismissed.
New India Assurance Company Limited vs. Suresh Chandra Aggarwal [SUPREME COURT OF INDIA, 10 Jul 2009]
Consumer Protection - Insurance - Motor Vehicles Act, 1988, section 3(1), 5, 15 - Insurance claim Repudiation of - No valid driving license at relevant time - Claimant insured his car - Insured vehicle met with an accident - Claimed lodged - Claimed repudiated on the ground that the driver of the vehicle was not holding an effective driving license at the time of accident. Driving license of the deceased driver had expired on 25-10-1991 i.e. four months prior to the date of accident and it was renewed w.e.f. 23-03-1992. State Commission observed that as license had been renewed subsequently and since driver had not been disqualified to hold such a license, the claim of the claimant could not be rejected on the ground that the license had not been renewed on time. Whether State Commission right in holding that driver of the insured vehicle had an effective driving licensee at the time of the accident? In case application for renewal is filed after more than 30 days after the date of its expiry, proviso to subsection (1) of section 15 of the Act, gets attracted and the license is renewed only w.e.f the date of its renewal, meaning thereby that in the interregnum between the date of expiry of the license and the date of its renewal, there is no effective license in existence. In the present case, the application for renewal of license was not filed within 30 days from the date of its expiry. Therefore, deceased driver did not hold an effective driving license, as required in the terms and conditions governing the policy on the date of accident. Further held, in view of the clear mandate of section 3 of the Act, the deceased driver was not even permitted to drive the insured vehicle in a public place. Claimant violated the provisions of section 5 of the Act by entrusting the vehicle to a person who did not hold a valid license on the date of the accident. Appellant was not liable to indemnify the claimant for the loss suffered by him in the accident of the insured vehicle - Impugned order set aside - Appeal allowed.
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