Avanti, took out motor car insurance from Healthy Trip Insurance Company. A cheque was issued under a contract of insurance of motorcar by the insured for the payment of premium of the policy. However, the cheque was dis
CS Executive · Economic, Business and Commercial Laws · PYQS · December 2019
Avanti, took out motor car insurance from Healthy Trip Insurance Company. A cheque was issued under a contract of insurance of motorcar by the insured for the payment of premium of the policy. However, the cheque was dishonoured for want of funds in the account. Meanwhile the car met with an accident and badly damaged, killing the insured owner. The claim for insured amount was repudiated by the company. Decide: Whether the claim of the insured amount may be recovered from Healthy Trip Insurance Company?
Answer & Explanation:
Based on the principles of reciprocal promises under the Indian Contract Act, 1872, and as established in cases like National Insurance Co. Ltd. vs. Seema Malhotra , when the insured fails to pay the premium and the cheque for the premium is dishonoured, the insurer is not liable to pay the insured amount. Since the insured's obligation to pay the premium was not fulfilled, the claim for the insured amount from Healthy Trip Insurance Company cannot be recovered.
Topics: Insurance Law
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