We saw some basic insurance principles that govern the contract in the last instalment of Cover Note.
Let us see some more principles that spell out rights and responsibilities, and some obligations and common sense procedures you should follow.
You have entered into an insurance contract with a valid insurable interest (financial ownership in the event of a loss) in what is insured and are conducting yourself with utmost good faith by disclosing all material facts.
When a loss takes place, at which point you will be entitled to prefer a claim, you have to observe the principle of loss minimisation (act as a prudent uninsured) and you will be indemnified (compensated) for your loss as per policy terms.
After this comes the principle of subrogation.
This means the insurer, after paying you the claim as per the terms of the policy now comes into all your rights against the party or parties that caused your loss.
If your property was damaged by somebody’s vehicle, in the normal course you would try to get him to pay for the repairs. Since you are insured, the insurance company steps in and compensates you. Once that is done, your right to compensation is transferred to the insurance company which can proceed against them to recover their expenses. (If they recover anything in excess of that, you are entitled to it!)
There are sixth and seventh principles of insurance that are not a part of your responsibilities but form the bases for determining the liability and its extent under an insurance contract. They are the principle of proximate cause and principle of contribution, and apply under certain circumstances.
Apart from the legal foundations of insurance, which gives you these responsibilities, you have other responsibilities when you buy a policy. Ensure correct information in your proposal form. This includes personal and contact information that should be updated as and when required.
Aadhaar link
These days Aadhaar is linked with insurance policies, a process that protects your interests. So, please ensure the proposal form and the policy spell your name and give your address as it appears in your Aadhaar.
PAN number is also a necessity in insurance proposal forms and later, in case of claims. If an error occurs, immediately pursue it with the insurance company and get it corrected.
Always pay for your policy via cheque or Internet banking or any recorded method of payment such as credit cards. This establishes your premium payment because, according to Indian law, risk commences only after premium is received by the insurance company.
If you issue a cheque, do verify that the debit appears in your bank account and maintain a copy and a record of all the documentation you share with your insurance company such as cheque number, bank statement, copy of your proposal form (which the insurance company has to supply to you as per regulations when they issue the policy), any correspondence with the insurance company and, of course, the contact information of your insurance company branch and the agent who sells the policy.
Create a method to track the renewal dates of various insurance policies.
Needless to say, all information exchange with your insurance company should be in writing, including requests for address change etc, for your own protection and for establishing the record. (The writer is a business journalist specialising in insurance & corporate history )
