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HindustanTimes Mon,22 Sep 2014

Insurance policies: Read the fine print

Bajaj Capital, PTI  New Delhi, April 02, 2004
First Published: 18:39 IST(17/1/2003) | Last Updated: 13:16 IST(2/4/2004)

An overview of what most insurance policies do not cover under General Insurance

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Life has a way of throwing up nasty surprises. Under such circumstances, Insurance acts as a device that covers your risks and protects you. But like many financial products, your cover — be it health, motor or householder’s policies come with fine print exclusions that could, in some cases, lead to the rejection of your claims on technical grounds. A chain is only as strong as its weakest link; likewise, an insurance cover is only as good as its exclusions. A better understanding of precisely what your cover doesn’t cover will, therefore, shield you from unpleasant surprises.

The main reason for claims being rejected is in the small print — those legalese clauses you don’t normally notice while taking a policy. So, it helps to read the fine print carefully to ensure you get your money’s worth of insurance.

Here’s an overview of what most insurance policies do not cover under General Insurance.

Householder’s insurance
This policy covers the entire range of risks that a householder would wish to cover-loss or damage to the building and its contents, burglary, risks to jewellery and valuables, glass, domestic appliances, baggage, and so on. Each of these heads comes with its own set of exclusions. And, to complicate matters, each insurer has a different set of exclusions. Here are some twists you should look out for.

For the building and its contents, only the contents mentioned in the policy are covered; loss or damage to livestock and pets is not. Nor is damage to jewellery and valuables due to cracking, scratching or breakage of parts, and breakage of plate glass during removal and/or repairs, disfiguring or scratching of glass other than fractures extending through the entire thickness of the glass. The cover for breakdown of appliances and television excludes damage to external fittings like antenna and cost of transport to and from the repair shop.

Public liability
Under this policy, which usually comes bundled with a householder’s or motor insurance policy, the insurer indemnifies the holder in respect of sums that the latter is legally liable to pay to a third party. However, the cover excludes compensation for death of or injury to any member of the policyholder's family or damage to property belonging to or in the custody of the holder or his family.

Motor insurance
Under the Motor Vehicles Act, your vehicle will not be allowed on the roads without third-party liability insurance. With this cover, you are insured against death or injury (caused by your vehicle) to pedestrians, occupants of other vehicles, and outsiders other than passengers, for an unlimited amount. The amount is generally equivalent to the compensation awarded by a court. For damage to third-party property, you get unlimited cover on policies taken before 1 July 2002; on policies taken after that, there's a cap of Rs. 7.5 lakh.

A comprehensive motor insurance policy offers wider cover, including loss or damage to the vehicle due to accidents, fire, explosion, lightning and burglary, but it does not cover damage to tyres (unless the vehicle too is damaged), wear and tear and mechanical breakdown. Claims under either policy can be rejected if the person driving the vehicle at the time of accident does not have a valid driving license or was drunk, or if the policy premium has not been paid beyond the grace period.

Personal accident cover
This policy covers you against accidents resulting in partial, total or temporary disability. The exclusions: accidents caused under the influence of liquor or drugs, breach of law, war, nuclear disaster and the like. There are different sub-clauses, and you cannot make a claim under more than one sub-category.

Medical insurance
TV commercials that show a happy spouse signing hospital bills with breezy cheerfulness — because she has medical insurance — tell only half the story. For one, not all hospital bills qualify for reimbursement: the policy comes into effect only when the holder is hospitalised for at least 24 hours. And you cannot make a claim within 30 days of buying the policy.

Apart from that, most health insurance plans don't cover diseases or injuries existing at the time of taking the cover, non-allopathic medication, congenital diseases, and cosmetic/aesthetic or related treatment.

Bottomline
The fine print is essentially where all the problems come from. Ignore it, and you could end up paying a lot more than the premiums.


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