Know Your Insurance Policy

Insurance contract is a legal document whereby the insurance company promises to restore the insured to the same financial position he has enjoyed just before the loss by replacing  what is  exactly lost.  A number of   Acts and Statues can have a bearing on a single policy. Each and every word of your insurance policy needs to be read and understood thoroughly. Always remember that the insurance contract is made by the insurance company safeguarding their position. It is upto the client to clarify his rights and course of action in case of any dispute or misunderstanding with the said insurance company.

The terms used in an insurance contract, though carries the regular meaning may have hidden “insurance specific” meanings also. For example, All Risks polices may state that the policy covers all risks of sudden, physical damages “not otherwise specifically excluded”.  What these specific exclusions are must be understood while taking the policy so that at any time in the future your needs (claims) are met under the said insurance policy.

Policy wordings decide what you will be getting in case of a claim like in private car policies,

• Rs.1000/- of each and every claim is not payable
• 50% depreciation to be applied to all Rubber, Nylon, Plastic parts, etc.

There may be clauses limiting or nullifying the scope of the policy.  For Example, in commercial vehicles policies, loss of accessories by burglary, theft, etc are not covered unless the vehicle itself is stolen at the same time.

Equally or more important is the Proposal form and the Declaration you sign and submit to the insurance companies. This is also a part of the contract or insuring agreement. The very opening operative clause of the policy states, “whereas the insured ……has made a written proposal and declaration which shall   be the basis   of this contract…….”

You should be specific and very careful in answering the questions of the proposals. Don’t allow others to causally fill in something in the proposal forms. An error, omission, false statement or misrepresentation can be costly and irrecoverable at the time of claims. Any change that may   be effected after taking the policy should be informed to the insurance company in time and endorsements (changes), if required, must be incorporated in the policy. Sometimes additional premium also will have to be paid.

On receiving the policy check the correctness of the details entered therein like, your name and address, door numbers, premium amount and date of payment, period of insurance, etc.  Also confirm the perils covered, that is, the cause of loss.  In case of motor vehicles policies see that the vehicle number, name and address of the insured, cubic capacity, passenger carrying capacity, registered class of the vehicle, etc are confirming with the Registration Certificate.  For an exhaustive understanding of the policy conditions, exclusions, etc which are given in the finer prints of the clauses attached to the policy sit with your Broker and ask them to explain the key policy wordings  in detail.