Section 64VB of IA : Section 64Vb: No Risk To Be Assumed Unless Premium Is Received In Advance

Explanation using Example

Imagine Jane purchases a car insurance policy from XYZ Insurance Co. Before the policy can come into effect, Section 64VB of the Insurance Act, 1938 requires that Jane must pay the premium. She decides to pay by cheque and mails it to XYZ Insurance Co.

Under subsection (2), XYZ Insurance Co. can assume the risk associated with Jane's car insurance policy on the date the cheque is posted. This means that even if the cheque has not yet been cashed or cleared by the bank, XYZ Insurance Co. is responsible for any claims Jane might file from that date.

If Jane decides to cancel her policy a few weeks later, XYZ Insurance Co. must refund any due premium directly to her, as per subsection (3), and cannot credit it to their agent's account.

Additionally, if the insurance agent who sold Jane the policy collected her cheque, he must ensure the full premium amount is sent to XYZ Insurance Co. within 24 hours, excluding bank and postal holidays, in accordance with subsection (4).