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CS Professional · Banking and Insurance - Laws and Practice · Functions in Insurance and Compliance related thereto (Part I)

Mr Iyer pays a premium for a fire policy by cheque and posts it to Ganga General Insurance on 10 March. The cheque reaches the insurer on 13 March. From which date may the insurer assume the risk under Section 64VB, where the premium can be ascertained in advance?

The insurer may assume the risk from 10 March. Under the Explanation to Section 64VB, where the premium is paid by a cheque sent by post, the risk may be assumed on the date the cheque is posted, not when received or encashed.

  1. A10 March, the date the cheque was postedCorrect
  2. B13 March, the date the cheque was received
  3. CThe date the cheque is encashed
  4. DSeven days after the cheque is posted

Explanation

The Explanation to Section 64VB states that where the premium is tendered by a cheque sent by post, the risk may be assumed on the date the cheque is posted. So the date is 10 March, not the receipt or encashment date.

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