Para­graph 6: Sub­ject to gen­eral terms and con­di­tions of the pol­icy

Insurance - - FEATURE -

The above para­graphs are sub­ject to the gen­eral terms and con­di­tions of the pol­icy.

Fal­la­cies

It is a fal­lacy to re­gard the En­dorse­ment as ter­mi­nated when there is a re­duced sum in­sured still in force dur­ing the cur­rency of the pol­icy pe­riod. As men­tioned ear­lier, this would tan­ta­mount to a breach of con­tract un­der para­graph 4, sub­para­graph (a). See illustration B above.

It is also a fal­lacy for the full sum in­sured (for ex­am­ple: RM2,000.00) to be re­in­stated to its orig­i­nal amount (RM2,000.00) when there is a bal­ance of sum in­sured RM500.00) fol­low­ing a claim. Here, the re­duced sum in­sured (RM500.00) is to be topped-up by the dif­fer­ence from the claim (or set­tle­ment) (RM1,500.00) to ar­rive at its re­in­stated sum in­sured (RM2,000.00).

Ad­di­tion­ally, it is a fal­lacy to in­cur a full pre­mium for re­in­stat­ing the sum in­sured back to the orig­i­nal sum in­sured for the cur­rency of the re­main­ing pol­icy pe­riod. The rate of pre­mium is cal­cu­lated on an an­nual ba­sis. The norm is that a pro-rata cal­cu­la­tion of pre­mium is war­ranted for the re­duced re­main­ing pol­icy pe­riod.

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