On 11th July, the Thane District Consumer Forum ruled that insurance policy becomes effective from the time the premium is paid. The Forum has allowed the claim of a complainant whose vehicle met with accident within hours of taking out the policy.
The bench of Forum president RB Somani and member Jyoti Iyer held that Darshan G Deore, the complainant, was entitled to get Rs. 3.35 lakh from Tata AIG General Insurance, after deduction of depreciation amount. The Forum ordered payment of Rs.10,000 towards mental suffering of Mr Deore and Rs. 1,450 towards legal expenses.
Mr Deore had bought the vehicle policy on 25 October 2008 at 20.34 hours, paying first premium on the spot. But his car had an accident immediately thereafter. The denied his insurance claim, saying that policy was effective from 26 October 2008.
But dismissing the submission of the insurer, the Forum said insurance policy comes into effect as soon as the first premium is paid.
Pankaaj Maalde, head-financial planning, ApnaPaisa.com said, “Insurance policy becomes effective only after the proposal for insurance is accepted by the insurer. Payment of premium is not enough because every proposal has risk attached to it. Insurance companies are in a business and they have internal underwriting guidelines which have to be followed before risk is accepted."
Mr Maalde, further said, "The underwriting team of the insurer has to assess the risk in the proposal before it becomes policy. Insurance companies have right to reject the proposal if they think the risk is not acceptable or there is misrepresentation. One can fight for the claim if he thinks there is delay in issuing policy without any reasonable cause and appropriate authority may order in favor of policy holder.”
