Negligence on the part of an insurance company can really land the insured in trouble, as a resident of Gurgaon recently found out. He says, four months ago he renewed his car insurance and the agent promptly gave him a cover note.
However, the certificate of insurance that was to follow never did, despite several reminders. Eventually, even the validity of the cover note expired and the certificate did not reach him. And thanks to this irresponsibility on the part of the agent and the insurance company, the car owner had to face the ignominy of being reprimanded by the traffic police for not keeping the insurance papers and was asked to pay a penalty.
Now in this age of computerisation and electronic communication, should we not discontinue with this practice of giving the cover note for motor insurance and straight away issue the insurance document? After all, if you apply online, insurance companies promise to give you a digitally signed policy instantaneously.
Ashok Dhingra: As is the practice, I paid the agent sent by the insurance company towards renewal of my car policy and he issued a cover note. However, much to my shock and dismay, after six months, I get a letter from the insurance company saying that the policy stands cancelled because of some reason, and that I must get the vehicle insured immediately within seven days. And the letter is already one month old. You can imagine my agony when I realised that my R8 lakh car, which is in top condition, was not even insured and that if an accident had happened, I would have been in real trouble. And the reason for cancellation apparently was that the Delhi office did not send the inspection report! What action should I take now?
Answer: Having issued the cover note, the insurer cannot back out on the contract. In fact if you see the definition of "cover" under the IRDA regulation on the protection of policy holder's interest, it makes it very clear that the cover note 'provides the evidence of the existence of an insurance contract'. In other words, once the cover note is issued, it means that the insurer has undertaken to indemnify any loss or damage to your vehicle.
In fact, the insurer is guilty of gross negligence on several counts here. First, in not issuing the certificate of insurance immediately after giving the cover note. Second, in cancelling the policy unilaterally, without even giving you a notice or an explanation, this is illegal. Third, despite taking the premium from you, he left your car uninsured. This means that the insurer did not fulfill his part of the contract at all.
Complain to the consumer affairs department of the IRDA and send a copy to the chairman. But before that, send a detailed letter to the insurance company listing out their unprofessional and illegal behaviour. You can also take up this case before the consumer court.