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Insurance LawViews: 946
Nov 25, 2008 1:50 amInsurance Law#

7 Th Thinking Hat
When you buy air ticket they prompt you to buy travel insurance also. I did buy insurance, with all innocence. Later I happened to cancel the ticket, several days before the date of journey. The ticketing company made their refund as agreed. But the insurance premium they colleted on behalf of the insurance company was gone! When contracted, they point then finger to the insurance company. When you contact the insurance company,they curtly say that the premium is non refundable. (Dummy,why did you not read the fine print?)

But the point is when the contract (of travel) ceases to exist, the risk also ceases. How a non exsistent risk can be insured? When I bought the ticket it was a composit contract of travel-cum-insurnce.Then why insurance fee cannot be refunded?

Are not the insurance companies cheating, however lawful the fine print may be?

Private Reply to 7 Th Thinking Hat

Nov 25, 2008 12:20 pmre: Insurance Law#

John Dierckx
Hi, just going of the top of my head here but I think you need to think to separate things here:
condition to be covered eg payment of premium
conditions in relation to payments eg non-refundable

So, your cancellation of travel meant that you were also not covered. However the paid premium was non-refundable. Whether you consider that cheating is probably a matter of opinion.

The simple thing is that you agreed to these conditions. Likewise there are many travel contracts that will not refund you your full ticket price upon cancellation (admin costs transferred back to the client)

I am not sure what the premium was for your travel insurance but it is very likely that refund of of the premium would have been costlier (in terms of admin and transaction fees) than the price of the policy itself.

Hope this helps.

Private Reply to John Dierckx

Nov 26, 2008 8:44 amre: Insurance Law#

RVIyengar

Re: "Are not the insurance companies cheating, however lawful the fine print may be?"

Strictly speaking, 'No'. When one opts for an insurance policy one is paying (premium) to insure one's life, health or possession against unforeseen events like death, illness, accidents, damage, etc. The payment is for the act of insuring.

Premiums are usually not refundable, irrespective of whether the insurance is availed or not. Premiums are in a way akin to a one-way street.

In fact, collecting premiums from many more helps the insurance companies pay the insurance amount to the few unfortunate ones - in whose case the insured event takes place.

Many travel insurance policies do not recognise cancellation of trips, as with the ticket the policy was ‘bought’ and one cannot go back on that.

However, some companies do, and the amount is often refunded once a claim for refund is made before the policy’s effective date.

As you have mentioned, it's all in the fine print.

Private Reply to RVIyengar

Nov 26, 2008 4:55 pmre: re: Insurance Law#

Ritu
''Strictly speaking, 'No'. When one opts for an insurance policy one is paying (premium) to insure one's life, health or possession against unforeseen events like death, illness, accidents, damage, etc. The payment is for the act of insuring.

Premiums are usually not refundable, irrespective of whether the insurance is availed or not. Premiums are in a way akin to a one-way street.

In fact, collecting premiums from many more helps the insurance companies pay the insurance amount to the few unfortunate ones - in whose case the insured event takes place."

~ I disagree..if one pays premium n doesn't die then of course premium ain't refundable...but thats not the same as paying the premium for travel n cancelling the travel plans....in the later case premium SHOULD be refundable 'cos:

its a case of void contract(loosely translated void = one which need not be performed)...i.e. a contract that is valid at the time of formation but subsequetly becomes void due to certain reasons like for example X promises to sell a car to Y & the car is subsequently destroyed in an accident before the sale is complete...the contract between X & Y becomes void & need not be performed...when the contract becomes void the principle of restitution i.e. restoration of money transfer that happened between the parties becomes apllicable...i.e. in the above case while Y can't sue X for breach of contract, X has to return any advance payment that Y might have made to X. One of the circumstances when the contract becomes void is--if the contract is based on the presumption of happening of a certain event the contract becomes void when the said event is no longer going to take place ( I remember there was a case in my law book which ran somewhat like this--X had hired a room to watch the king's procession..the procession was subsequently cancelled. It was held that contract of renting became void cos it was based on the assumption of procession)...translated to the situation in the present thread ......

the contract of insurance was based on the presumption of travel...& if travel is cancelled, the insurance becomes a void contract & hence it would stand cancelled & restitution becomes applicable & hence premium should be refunded.

Of course companies are known to do lotsa unreasonable things hiding behind fine print & corporate policies but I think this position can be challenged in courts as being unreasonable & against the basic priciples of Law.



Private Reply to Ritu

Dec 07, 2008 10:20 amre: re: re: Insurance Law#

7 Th Thinking Hat
First, sorry for delayed response. I am down with a surgery.

Thanks for all the resposes. Ritu's reply comes closest to my understanding of law of contract.

Private Reply to 7 Th Thinking Hat

Dec 07, 2008 1:58 pmre: re: re: re: Insurance Law#

charuhasan

All insurance agreements are contracts and they are subject to the provisions of Indian Contract Act. Whatever clauses you enter in the agreement they are subject to scrutiny of the Judiciary by application of the “law of contracts.”

Let us take for instance a sale agreement for rupees one hundred thousand by the buyer paying an advance of rupees seventy five thousand. If the buyer does not pay the balance in the appointed date the vendor can send a notice for non fulfillment of agreement and may sell to a third party. Now how much the buyer is liable to recover from the seller depends upon the loss incurred by the seller and the clause in the agreement that the buyer shall forfeit the entire advance may not be enforced. If the buyer goes to court to recover the advance the court will decide what the buyer should lose for non performance.

Now in the instant case, consider the value of work done the insurance company till the completion of agreement. Their liability arises only when the travel is completed and any claim is made. The insurance company has not failed to fulfill any part of the contract. If the insured makes any claim towards the premium paid the court could consider whether the forfeiture clause of the premium is unreasonable in which case the court would order refund. On the other hand if the insurance company had entered a clause that the premium is refundable in case of cancellation of ticket the insurer can claim for a refund.

Private Reply to charuhasan

Dec 09, 2008 5:32 amre: re: re: re: re: Insurance Law#

Ritu
Hey 7th thinking hat/Mohan, I hope you are recovering well. :-)

@ Refund of insurance premium, the company SHOULD refund it upon cancellation of yr travel ticket after deducting nominal processing charges, irrespective of what they choose to write in fine or large print...in a gym i had joined sometime back, they wrote in large print that if anyone is hurt using a machine the gym aint responsible...i don't think writing such things reduced the responsibilty of gym for injuries...but a guy broke his nose using one faulty machine & dint sue cos he actually believed that gym aint not responsible cos of what was written over there in large print!! But at the end of the day companies know that they can get away with it cos ppl will fret n fume at the unreasobleness of it all but the amount being small when taken individually will do nothing abt it anyways...but there are a few consumer activists in India who take up such causes on behalf of consumers.

Private Reply to Ritu

Dec 09, 2008 2:19 pmre: re: re: re: re: re: Insurance Law#

charuhasan
Ritu
Did you compare the value of work done by an insurance company for issuing a policy that would have been honoured if we had travelled and passed away to the nether world? Our heirs can recover the assured money from the Insurance company in such a case.

Private Reply to charuhasan

Dec 09, 2008 8:30 pmre: re: re: re: re: re: re: Insurance Law#

Ritu
Charu...here we go again....I'm all for the insurance company keeping my premium if I travel & don't die but they should give it back if I cancel my ticket...

travel cancel => Insurance cancel => refund the premium.

Private Reply to Ritu

Dec 11, 2008 1:37 pmre: re: re: re: re: re: re: re: Insurance Law#

7 Th Thinking Hat
Thanks Ritu, I am better now.

Charu Sir, It is simple, If airline and railways can make refund after deducting their charges why ins companies cannot make refund? Now I am convinced of my case and decided to go after the insurance company. Thank you LEGAL NEEDS and all members who posted. I am benefited.

Private Reply to 7 Th Thinking Hat

Dec 11, 2008 6:58 pmre: re: re: re: re: re: re: re: re: Insurance Law#

Ritu
Keep us posted here, It would be interesting to know what alibi they can come up with apart from the fine print excuse!

Private Reply to Ritu

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