Page 78 - Ebook health insurance IC27

The Insurance Times

 Both must agree on the same subject and the same terms of the contract they are
entering.

 General commercial contracts are governed by the principles of let the buyer beware.
This means it is the duty of the buyer to be careful before entering into any agreement.
But this does not apply to the insurance contracts.

 Insurance contracts are based on mutual trust. The prospective insured must disclose
everything best ofhis knowledgein theproposal form before enteringinto theinsurance
contract. Sometimes some diseases cannot be detected by tests. It may appear at a
later stage. So insurer believes that all information has been duly disclosed by the
insured.

 In case of nonlife insurance an insurer cannot practically verify the establishment or
the property or the insured. It must rely on the declaration made by the insured on
good faith. The policyholder must disclose all the material facts which are relevant to
the assessment of the risk.

 If it is proved that the insured has not declared some material fact the insurer has the
right to declare the policy as void and forfeit all the premiums paid.

 The insurer must fully disclose the terms and conditions of the policy whereas the
insured must fully disclose the facts concerning the property to be insured.

 IRDA has given an option to the insured in form of free look period wherein if
the policyholder is not satisfied with the terms and conditions of the policy may
withdraw the policies within 15 days of the receipt of the policy and insurer will
be entitled to refund the premium after detecting the statutory charges.

 The refusal by the insurer to renew insurance is a material fact.
 The duty of disclosure of material facts rests on both insurer and the insured.

8 2 Guide for Health Insurance