The General Insurance Council (GI Council) has issued a public advisory wherein it has warned that some people claiming to be “insurance experts” are advising policyholders to lodge claims with insurers for losses arising due to coronavirus-led disruption under loss of profit, business interruption policies and are offering their services to get claims settled under such policies.
However, it said, claims under such policies can only be triggered only if the claim is admissible under material damage section.
“Therefore policyholders are advised not to get carried away by the false promises/ suggestions of such entities, that ‘business interruption losses’ arising out of covid19 shut down are admissible," the council said in a public advisory.
Normally, business interruption losses are covered under property damage policy. Hence, only if there is damage to property that the ‘loss of profit’ policy gets triggered. Cases where there has been a fire, breakdown of machinery due to riots, terrorist activities or natural events like floods, cyclones and earthquake, the ‘loss of profit’ policy gets triggered and business, which have suffered losses, can make claims for their losses.
The GI Council has further stated that such people who are advising policyholders to lodge claims for losses because of Covid-19 are violating the provisions of Section 42D (9) of the Insurance Act, 1938 and can be prosecuted.
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