Government extends motor, health insurance renewal relaxation – Times of India

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MUMBAI: The government has allowed vehicle owners and mediclaim policyholders, whose contracts come up for renewal between March 25 and May 3 to renew their policies by May 15. The relaxation enabled through a gazette notification, is in line with an earlier order which gave policyholders up to April 21.
Insurers said that although policies could be renewed online a large part of their renewals take place through intermediaries who collect the cheque. Given the coronavirus lockdown, many of these cheque collections could not take place. Under Section 64VB of the Insurance Act, insurers cannot provide cover unless premium is received in advance. This is to eliminate the moral hazard by providing cover with retrospective effect.
Through a notification, the government had relaxed this law for motor third-party which is statutory and health insurance where timely renewal is critical. The notification will reassure policyholders that even if they are not able to renew their policies on time, they would not lose the continuity benefit.
Without the notification, if the policy was renewed with a break after the lockdown the application would be treated as a fresh proposal and not a renewal. This would mean that insurers would be able to reject some claims on the grounds that ailment was pre-existing before the contract was issued.

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