I got my car policy renewed much before its date of expiry though an agent. A day after the commencement of the policy, I met with an accident and raised a claim. But the insurer refused to settle the claim as they had not received the premium cheque. On enquiring the agent, it was found that the cheque was still in his custody. Is the insurer right in doing this?

Kripa Shankar Mishra, Noida

What has occurred is unfortunate. Despite your best efforts to renew the car insurance in time, the agent’s oversight has cost you dearly. The premium payment for any policy is governed by Section 64 VB of the Insurance Act, 1938, whereby, it is specifically mentioned that the entire premium amount is to be paid in advance. What this means is that the premiums due should reflect in the insurer’s bank account and if you make a cheque payment and assume that to be enough, it would not stand a challenge.

In your case, you had issued the cheque in favour of the insurer much before the expiry of your previous policy. But, in real terms, the money was still with you as the cheque was neither presented to the insurer nor did it reflect in your bank as cleared. Thus, the insurer did not receive the premium, which is not in compliance with Section 64 VB. Therefore, the insurance company is right in denying your claim. It should be a lesson for others that it is not enough to write a cheque to the insurer, but also wait for it to be cleared to know that the policy is in force and renewed to avoid any such experience as you had.

olmdesk@outlookindia.com