GEOGRAPHICAL AREA coverage in your Motor Insurance Policy?

Have you ever gone through the policy wording of your motor insurance policy?

Yes? Great!

No? Well, now is the time!

So, you’ll need to get to the GENERAL EXCEPTIONS section of your motor policy wording, because the following incident is based on the General Exceptions which are applicable to all Sections of the Motor Insurance Policy.

“The Company shall not be liable under this Policy in respect of any accidental loss or damage and/or liability caused sustained or incurred outside the geographical area”.

Now for the incident:

(Names have been changed to protect the identity of the insured and the insurer.)

Rishi insured his Suzuki Brezza car comprehensively with Bharat Insurance Company. The premium was Rs. 26,000 and the Sum Insured was Rs. 9,00,000/-. Three months later the car suffered a total loss as a result of a collision in Nepal. Before he left India to Nepal, he insured his car with United Insurance Company (specializes in insuring Indian cars traveling outside India). United Insurance Company paid for the total loss to Rishi. When he came back to India, he approached Bharat Insurance Company asking for a return of premium.

What one of these do you think Bharat Insurance Company would do?

a) Refund nothing and keep the entire premium of Rs. 26,000

b) Refund 30% of the premium.

c) Refunds the entire premium to Rishi.

Or will the insurer pay Rishi an amount based on the short period rate?

Please let us know.