15. Conditions Precedent to the Contract

The problem with the Indian consumers is no one reads the policy conditions. They spend huge money in paying the compulsory Motor Insurance premium. However, once the policy is issued, they never read the policy terms and conditions. They simply keep the policy either in the glove compartment or at home and forget all about it not till an accident but till the insurance company refuses to pay the claim. If only, they read it once! The regulator i.e., the Insurance Regulatory Development Authority of India (IRDAI) may not be having either of the following parameters with it:

• Probably, it is unaware of Insurance.
• It is busy in Developing…what they do not know.
• It is confused about Regulation.
• It does not realize it is the Authority.
• Every insurer is a separate entity and each should have different policy wordings.

I am certain that no sane person will agree with above parameters.

In the Motor Insurance policy in General Conditions, there is the first condition – Conditions Precedent to the Contract. It reads as follows:

• Premium to be paid for the policy period before the commencement date as opted by the insured in the proposal form.
• The due observance and fulfilments of the terms, conditions and endorsements of this policy in so far as they relate to anything to be done or complied by the insured and the truth of the statements and answers in the said proposal shall be condition precedent to any liability of the company to make any payment under this policy.’

I examined the following insurance companies’ Motor policy wording:

• HDFC Ergo General Insurance Company
• Tata AIG General Insurance Company
• Reliance General Insurance Company
• Liberty General Insurance Company
• ICICI Lombard General Insurance Company

Tata AIG General Insurance Company is the one company which mentions this specific condition i.e., Conditions Precedent to the Contract, stated above. The rest of the insurance companies do not mention about it. What, then, will happen to the insured / client?

If the client is not told that there are certain Conditions Precedent to the Contract, it means other than Tata AIG General Insurance Company, all other companies doing their best to deceive the customer and deny claims.

On the contrary, the Tata AIG General Insurance Company, by specially mentioning and imposing this condition i.e., Conditions Precedent to the Contract is cheating the policyholder i.e., the insured. All other companies stated above are very fair to the policyholder and are not cheating because for them there is no Conditions Precedent to the Contract.

It logically impossible for both the above statements to be correct. While reminding every reader that it is the responsibility of the regulator to ensure uniform compulsory Motor Insurance policy wording, I must state that in either of the above cases, the policyholder is at ‘Ram Bharose’. Are you listening IRDAI?

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