Chapter 1

ASSIGNMENT OF POLICY

ASSIGNMENT OF POLICY

A marine policy is assignable by endorsement, or in any other customary manner. The assignee can sue on it in his own name subject to any defense which would have been available against the person who elected the policy. The assignment may be made either before or alter the loss, but an assured who has parted with or lost his interest in the subject-matter insured cannot assign.

RE-INSURANCE&DOUBLE INSURANCE

Every insurer has a limit to the risk he can undertake. If a profitable proposal comes his way he may insure it even if the risk involved is beyond his capacity. Then, in order to safeguard his own interest, he may insure the same risk, either wholly or partially, with other insurers, thereby spreading the risk. This is called -re-insurance. Key insurance can be resorted to In all kinds of insurance and a contract of re-insurance is also a contract of indemnity. The re insurers are liable to pay the amount to the original insurer only if the latter has paid to the insured. Re- insurance is subject to all the conditions in the original policy and the re-insurer is entitled to all the benefits, which the original insurer enjoys under the policy.

When the insured insures the same risk with two or more independent insurers, and the total sum insured exceeds the value of the subject matter, the insured is, said to be Over insured by double insurance. Both double insurance and over-insurance are perfectly lawful, unless the policy otherwise provides. A man may insure with as many insurers as he pleases and up to the full value of his interest with each one of them. If a loss occurs, he may claim payment from the insurers in such order as he thinks fit: but in no case he shall be entitled to recover more than his loss, because a contract of insurance is a contract of indemnity only.

Insurance Documents

Proposal forms

The proposal 1orm contains questions designed to draw material information regarding the particular risk proposed for insurance. The number and nature of questions vary according to the particular class of insurance concerned. Proposal form is not used in cargo insurance; instead a duly filed questionnaire is collected. As per IRDA regulations proposal forms are used in all classes of insurance except cargo. Proposal forms are also used in marine hull insurance. Generally the 1ollowing questions are common in proposal forms.

  • Name of the proposers in full.
  • Address of the proposer.
  • Occupation or profession or business of the proposer.
  • Previous and present insurances and full details of the losses suffered by him whether or not they were insured.
  • Insured sum.
  • Signature, date and in some cases agents
  • Certain special questions depending upon the class of
  • The main purpose of insurance proposal form is to provide all material information to the insurers. The form also includes declaration by the insured that the answers are true and accurate and that he agrees that the form shall be the basis of insurance contract.

Policy forms

The policy is a document which provides evidence of the contract of insurance. This document has to be stamped according to the provisions of the Indian Stamps Act. In fire and miscellaneous insurance, the policy form is used on a scheduled basis. The scheduled type of form consists

  1. The Heacding: Name of the insurer and its registered address.
  2. The recital clause: This section introduces or recites the parties to the contract. That is the insurer and the insured.
  3. Operative or insurance clause: the section mentions the perils insured under the policy and the circumstance which the insurer will become liable to make payment the insured. In this clause a reference about the sum insures or other liability limit is also mentioned,
  4. Schedule: This part includes all he typewritten information applicable to the particular contract, for example in fire insurance the following information is provided in the schedule.
  • Insured and Address
  • Policy Number
  • Date of issue
  • Agency
  • Risk Covered
  • Period of Insurance
  • Property Insured
  • Rate
  • Premium
  1. Conditions: Majority of policies contain conditions. These are printed on the policy. There are express conditions which are necessary to0 regulate the contract. Express conditions serve various purposes. E.g. Condition for cancellation of policy.
  2. Warranties: Along with express conditions there are express warranties which are incorporated in the policy E.g.: express warranty stated in marine policy –warranted that the goods are packed in double gunny bags.

If warrant becomes breached, the policy becomes voidable at the option of the insurer.

  1. Cover Notes: These are issued when the negotiations for insurance are in progress and it is necessary to provide cover on a provisional basis or when the premises are being inspected for determining the actual rate applicable. The cover note is temporary and stands cancelled when the policy is issued.
  2. Certificate of Insurance: A certificate of insurance is issued to satisfy the requirements of the insured or the banks in respect of each declaration made under an open cover and or an open policy. Under the Motor Vehicles Act, a certificate of Insurance Is required to be issued in addition to the policy. In marine Insurance certificates of insurance are issued to provide evidence of cover on shipments insured under cargo open cover or floating polices.
  3. Renewal notice: The insurer issue a renewal notice one month in advance of the date of expiry, inviting renewal of the policy.

According of IRDA regulations, 2002 (Protection of Policy holders interest), A general insurance policy should state clearly the following facts.

  1. The name(s) and Address (s) of the insured and of any bank(s) of any other person having financial interest in the subject matter of insurance.
  2. Full description of the property or interest insured.
  3. The location or locations of the property or interest insured under the policy and where suitable with respective insured values.
  4. Period of insurance
  5. Sums insured.
  6. Perils covered and not covered.
  7. Any franchise or deductible applicable.
  8. Premium payable and where the premium is provisional subject to adjustment, the basis of adjustment of premium is to be declared.
  9. Policy terms, conditions and warranties
  10. Action to be taken by the insured upon the occurrence of a contingency likely to give rise to a claim under the policy.
  11. The obligation of the insured in relation to the subject matter of insurance upon occurrence of an event giving rise to claim and the rights of the insurer in the circumstances.
  12. Any special conditions which are attaching to the policy.
  13. Provision for cancellation of the policy on grounds of misrepresentation, fraud, non-disclosure of material facts or non-cooperation of the insured.
  14. The address of the insurer to which all communications in respect of the insurance contact is to be sent.
  15. The details of the riders attaching to the main policy.
  16. Performa of any communication the insurer may seek from the policy holders to service the policy
  17. Every insurer is required to inform and keep informed periodically the insured on the requirements to be fulfilled by the insured regarding lodging of a claim arising in terms of the policy and the procedures to be followed by him to enable the insure to settle a claim early.

Documents Required for LIC Policy:

  • Self-Attested Photograph
  • Age Proof: (school certificate, passport, PAN card, driving license)
  • Residence proof (ration card, election card, electricity bill, water bill, telephone bill, credit card bill, bank passbook, driving license, rent agreement, passport etc.)
  • Photo ID proof (PAN card, D/L. passport, election card, Ration card & bank pass book with the proposers photograph on it)
  • Income proof (salary slip, form 16, Income tax returns, pension pass book etc.)(if total Premium Exceeds one lakh)

IRDA now has laid certain guidelines with concern to the documents required for the policy to be insured. The insurance companies have to follow all the requirements of the IRDA regarding the address proofs and identity proofs of the insurer. Unit-linked policies are more in demand because of certain advantages such as flexibility, transparency, simplicity, liquidity and efficiency in fund management. The ULIP markets saw a lot of changes recently which has made them better and more transparent to invest. The documents required are:

  • For identity proof:
  • Passport
  • PAN Card
  • Voters Identity Card
  • Driving License
  • Letter from a recognized public authority or public servant verifying the Identity and residence of the customer
  • For address proof:
  • Telephone bill
  • Bank account statement
  • Letter from any recognized public authority

Now days, Insurance Agents are asking for a photo, as most Insurance companies have option to add a photo to your application.

Claim documents

Following documents are required for Fire Claim-

  • Copy of the policy
  • Survey report
  • Claim form duly completed by the insured
  • Police report (for riot claims)/ Panchanama (fire loss)
  • Fire brigade report
  • Meteorological report (in case of flood. cyclone etc. claims)
  • Photographs
  • Detailed claim bill with necessary bills / voucher
  • Copy of enquiry committee report on cause of loss if enquiry is ordered by insured
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