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Ask Mint Money | Insurer is well within its right while amending policy terms

Ask Mint Money | Insurer is well within its right while amending policy terms
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First Published: Tue, Mar 01 2011. 09 00 PM IST
Updated: Tue, Mar 01 2011. 09 00 PM IST
I took a health insurance policy from a private insurer last year. In order to renew the policy, I have been asked to pay a higher premium as I have moved to the age group of 40-plus. This was not told to me before and the policy documents also do not mention this. When contacted, the company said premiums of all insurance companies have gone up this year. The company is also avoiding the claim-free bonus. Should I not renew the policy and complain to Insurance Regulatory Authority of India (Irda)? Suggest what action I should take on this.
—Swami
Health insurance policy is a one-year contract. Both parties have the option of reviewing the contract at the time of expiry. You have the right to move to another insurer while the insurer has the right to amend terms of the contract. Hence the insurer is not under any obligation to disclose pricing for the future either in the policy or while selling the policy. At best the insurer can give the current pricing structure at the time of sale. However, Irda prescribes insurers to mend terms of the contract or increase premium drastically or if a claim has been taken. Normal hike to factor in inflation or overall adverse claims experience is allowed. Also all insurers hike premium as the age goes up. Most insurers increase price at age slabs of 10 years till 55 years of age and in age slabs of five years after that. Therefore your premium increase after you cross 45 years. In case the insurer insists on withholding your bonus and/or increasing your premium by more than 10%, you should complain to Irda. Health insurance portability will be introduced this year. On the next renewal you will be able to move to another insurer without losing any benefits.
I have bought a car for Rs5.50 lakh. I want to know if I can opt for an insurance for my car even though it is a depreciating asset. Also suggest a cheap insurance cover and tell me if the model of the car will lead to any hike in the premium.
—Anupma Kashyap
There are two parts of car insurance. Part A is called third-party insurance and it is compulsory under Indian law. No vehicle can be taken out on the road unless it is insured under under part A. This will cover losses that the car user may cause to others.
Part B is called own damage insurance. This part covers reimbursement for damage to the car due to natural calamities or accidents. This part is optional. When both the parts are taken, the cover is referred to as comprehensive policy. It is recommended that you take a comprehensive policy. You can also add “return to invoice” benefit to your policy. With this add-on cover, your insurer will pay you the invoice value of the car incase of a total loss or theft instead of the depreciated value.
Queries and views at mintmoney@livemint.com
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First Published: Tue, Mar 01 2011. 09 00 PM IST
More Topics: Ask Mint Money | Insurance | Irda | Premium | Health |