UNITED INDIA INSURANCE CO.LTD. - Appellant Versus FATEH SINGH - Respondent

Core ratio / Key holding

Headnote

Motor Vehicle Insurance — Commencement of Risk — Cover Note vs. Policy Date

Insurance Act, 1938 — Section 64-VB — Premium Payment — Risk Assumption Date

Issues for determination

• Whether the insurance company is liable to pay compensation if the premium cheque is post-dated and the accident occurs before the cheque date but after the cover note is issued?

Ratio decidendi

• Where an insurance agent issues a cover note explicitly stating risk coverage from a specific date, and the insurance company accepts a post-dated cheque for premium, the company is bound by the cover note's terms, and a subsequent policy issued with a later commencement date is a unilateral act not binding on the insured.
• Section 64-VB of the Insurance Act, 1938, does not mandate actual receipt of premium by the insurance company for risk coverage, as it allows risk assumption from a date prior to actual receipt, such as the date a cheque is posted or money order booked.

Important points

• Held, the insurance company was rightly held liable to pay compensation based on the cover note issued prior to the accident, despite the post-dated premium cheque.

Keywords