Mr. Rajiv Shukla residing in Delhi purchased on 9th May, 2016 a Honda Car for ₹ 8,00,000. The vehicle was registered as DL 2CJ 8745. He, thereafter, applied for a comprehensive insurance policy with Pioneer General Insur

CS Professional · Insurance - Law and Practice · PYQS · June 2017
Mr. Rajiv Shukla residing in Delhi purchased on 9th May, 2016 a Honda Car for ₹ 8,00,000. The vehicle was registered as DL 2CJ 8745. He, thereafter, applied for a comprehensive insurance policy with Pioneer General Insurance Co. Ltd. and after ascertaining the annual premium, issued a cheque in favour of the insurance company for ₹ 19,000 as premium for a comprehensive coverage of the vehicle for a period of twelve months commencing from 11th May, 2016. The insurance company accordingly issued Mr. Shukla with a comprehensive motor policy for the period from 11th May, 2016 to 10th May, 2017. On presentation of the cheque issued by Mr. Shukla by the insurance company, it was dishonoured on 14th May, 2016 on the ground "insufficiency of funds" and an intimation was sent to Mr. Shukla by the insurance company on 16th May, 2016. Meanwhile, while returning from his office on 15th May, 2016, the vehicle that was driven by Mr. Sukla met with an accident and suffered damages. A third-party walking on the road also sustained injuries and had to be hospitalised. The accident was reported by Mr. Shukla to the police and a FIR was also lodged. On the basis of the above facts, answer the following questions : Does Mr. Rajiv Shukla have a valid claim in respect of damage to his car DL 2CJ 8745 as a result of the above accident ?

Answer & Explanation:

Section 64VB of Insurance Act, 1938 prohibits insurance companies accepting a risk on an insurance policy without receiving the consideration (Premium) in advance. The insurer cannot assume any risk earlier than the date on which the premium has been paid in cash or cheque to the insurer. Here in the present case, payment by cheque by Mr. Shukla is a reciprocal promise to be simultaneously performed. When the insured failed to pay the premium or whether cheque issued by him was returned dishonoured by the Bank, the insurer was not justified in seeking reimbursement of the claim in the absence of any consideration. In this case Mr Shukla is not liable to take claim from the insurance in respect of damage of his car DL 2CJ 8745 because his cheque get dishonoured. As per the law if the insured cheque get dishonoured due to insufficient fund in the account than court will not consider this case as it is the negligent of the insured and insured is not liable to claim from insurance company. But in case if the cheque get dishonoured due to any other reason like signature not matching or any spelling mistakes on the cheque than in these cases insured is liable to claim from the insurance company.

Topics: Motor Insurance

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