Moment of truth in a policy contract

Passenger car insurance vector concept in flat style  

One objection to buying insurance, especially non-life insurance, is that the premium is a ‘waste’ if you wind up making no claim.

Your premium is not an investment and the claim is not the return on investment (RoI). If so, the premium would not be so low! Premiums of large numbers of people are pooled to cover the loss of a few. The amount is calculated based on the likelihood of loss as shown by past experience. Yet, for you and me, our claim represents the moment of truth in an insurance transaction. We, as customers, are claiming our right and the insurance company has to fulfil its duty under the contract to make good the financial loss.

Iffy proposition

Let us understand the reason for the common perception that getting claims paid by insurance companies is an iffy proposition.

Insurance is a legal contract and everything is in writing. It is our duty, as party to the contract, to know what we are paying for, what we can receive and under what terms and conditions.

In fact, this duty begins with due diligence before buying an insurance policy because the best of contracts, if they are for the wrong product, will not serve our purpose.

Making a successful claim presupposes the following. That you have a valid insurance policy, that the loss you are making the claim for falls within the purview of the policy, and that you can support the nature, cause and quantum of loss with documentary proof.

In addition, insurance companies ascertain that the claim itself is genuine because fraudulent claims are aplenty and they are a financial burden on honest policyholders. For ascertaining the facts independently and for quantifying the loss correctly, the insurance company may initiate a survey or investigation. It is your responsibility to give them your full cooperation.

The process of making claims is simple in concept.

Take an example. Let’s say your car meets with an accident on the way to work and the bumper is badly dented.

For your claim to be admissible, your car insurance policy should be current and your documents such as the car’s registration certificate and the driving licence of the person driving the car at the time of the accident should be valid. Moreover, the accident should not have taken place while violating any law, the vehicle should have been used for its stated purpose and the driver should not have been under the influence of intoxicating substances.

Medical attention

What do you have to do when an accident takes place? Even before you formally inform your insurer, it is your moral duty to help any person injured in the accident to get emergency medical attention.

You have to inform the police, if they are not already there and inform your insurance company by calling their dedicated call centre number.

Calling your agent will be a good idea as he can assist you with all the instructions and take over the process of making the claim by submitting your documents. In the next instalment, we shall see the details of documents you would need and how to file your claim.

(The writer is a business journalist specialising in insurance & corporate history)

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Printable version | May 10, 2021 5:17:26 AM |

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