M/s XYZ General Insurance Company Ltd. delivers a fire policy to Mr. Venu on April 15. However, the insured paid the premium on a later date. Unfortunately, there was a Fire in the Premises resulting in loss of Property
CS Professional · Banking and Insurance - Laws and Practice · PYQS · June 2024
M/s XYZ General Insurance Company Ltd. delivers a fire policy to Mr. Venu on April 15. However, the insured paid the premium on a later date. Unfortunately, there was a Fire in the Premises resulting in loss of Property Insured. The Company denied its liability on the basis of the fact that the premium was overdue at the time of loss. Is it correct? Discuss.
Answer & Explanation:
No, the M/s XYZ General Insurance Company Ltd. cannot deny its claim. When an insurance company delivers a policy without requiring immediate payment of the premium, they incur responsibility for the Risk, because having delivered the policy, they are held to have given credit for the premium. Moreover, when once the contract is concluded with the premium and other particulars fixed, the policy drawn and delivered, the insurer becomes liable for loss by fire, and it is immaterial whether the premium is paid before or after the fire.
Topics: Insurance Law
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