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

Rohit Sharma gives written notice of assignment of his policy to Suresh on 5 March. An insurer's servicing office receives it on 12 March. Rohit's earlier instrument in favour of Anil was notified to the insurer on 20 March. As between Suresh and Anil, priority is governed by:

Suresh has priority. Under the Insurance Act, priority among assignees follows the order in which notices of assignment are delivered to the insurer, not the dates of signing. His notice was delivered on 12 March, before Anil's on 20 March.

  1. AThe order in which the notices were delivered to the insurer, so Suresh ranks firstCorrect
  2. BThe dates on which the instruments were signed, whichever is earlier
  3. CThe amount of consideration paid by each assignee
  4. DThe date of the policy's issue

Explanation

Section 38(6) says the date of delivery of notice regulates priority, and with several instruments the order of delivered notices governs. Suresh's notice was delivered on 12 March, before Anil's on 20 March. Signing dates are irrelevant, which is why that option is wrong.

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