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HindustanTimes Wed,24 Sep 2014

Is your insurance policy document unintelligible?

Pushpa Girimaji   October 07, 2012
First Published: 00:03 IST(7/10/2012) | Last Updated: 00:05 IST(7/10/2012)

Do you read and understand all the terms and conditions, particularly the exclusion clauses, before buying an insurance policy? Well, don't even attempt to answer—I know it already and I don't blame you for not reading them! (even though you should in your best interest).

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 After all, that's the intention of the insurance companies— to write the policy document in a way that puts off consumers and discourages them from reading it. Even if they do attempt to read it, most likely, many of the terms would be unintelligible.

 Here is an example of a convoluted sentence rendering an important policy condition incomprehensible:"Every renewal premium (which shall be paid and accepted in respect of this policy) shall be so paid and accepted upon the distinct understanding that no

alteration has taken place in the facts contained in the

proposal or declaration herein before mentioned and that nothing is known to the insured that may result to enhance the risk of the company under the guarantee hereby given."

 Here is another one: "No benefit amount will be payable if the insured suffers from any of the covered critical illnesses directly or indirectly by attempting suicide within one year from the date of commencement of risk or date of reinstatement of the policy, whichever is later".

Considering that insurance is a contract between the insurance company and the policy holder and the terms and conditions of the  policy  are binding on the consumer, the least that one can expect from the insurer is to state them in a manner that is easily understood. (And also in English as well as the local language) But obviously, insurers have no such concern.

The  Insurance Regulatory and  Development and Authority (Protection of Policyholders' Interests) Regulations, 2002  mandates  that  (a) the prospectus of any insurance product shall clearly state the scope of benefits, the extent of insurance cover and in an explicit manner explain the warranties, exceptions and conditions of the insurance cover.  (b) the insurer or its agent or other intermediary shall provide all material information pertaining to the policy so as to help the consumer take an informed decision.

If you look at the policy documents of insurers, you will realise that they have really not complied with the first requirement of stating the policy terms and conditions in 'an explicit manner'.  So, now the insurance regulator has begun that exercise of bringing in plain language in insurance policies, beginning with health insurance policies.

The decision to begin with health is also prompted by the large number of consumer complaints against health insurers. Out of 93,155 complaints registered against non-life insurers in 2011-2012, 34,836 complaints pertained to health insurance.


P.N. Naik:  Eight months ago, at about 8pm, two robbers armed with knives entered my shop, threatened my two employees and took away silver artifacts valued at R24 lakhs.  The insurance company has, however, rejected my claim quoting an exemption clause and saying that there was no forcible or violent entry or violence involved in the robbery. Can I go to the consumer court?

Please lodge a complaint with the consumer court. In National Insurance company Vs Kashmir Handicrafts Emporium (RP No 1132 of 2003), where three people had entered the complainant's shop and taken away at gun point, a box containing gold and silver jewellery worth Rs. 4.67 lakhs, the National consumer Disputes Redressal Commission had dismissed a similar argument of the insurer and held that pointing a gun at the employees and threatening to shoot did constitute force and the insurance company had to indemnify the loss.


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