The Life Insurance Council of India told policyholders that force majeure clause will not be exercised by state-owned as well as private insurance companies in case of death from COVID-19. Complete Coverage: Coronavirus
Crux of the Matter
Understanding the Clause The force majeure clause states that two parties can avoid legal obligations signed under a legal contract in the case where none of the parties have control over the situation dominated by irresistible compulsion or superior strength that may include “An Act of God” or man-made situations. One can invoke force majeure in the case of war, riots, earthquakes, hurricanes, lightning, and explosions. It also includes lockouts, energy blackouts, unexpected legislation, slowdowns, and strikes. In the situation of the pandemic by COVID-19, Life Insurance Council of India clarified that companies cannot revoke ‘force majeure’ in the cases of claims due because of death from COVID-19. To simplify: an insurance company may void your claim in case of continuance of force majeure and get free from the obligation of payment of insurance claim; however the Life Insurance Council has directed Life Insurance companies to not exercise this clause. Also in case of such scenarios, life insurance companies may allow a grace period for payment of any dues without the policy going lapse.
The spiralling global and local impact of COVID-19 pandemic has emphasized the fundamental need for life insurance in every household. The life insurance industry is taking every measure to ensure that the disruption caused to policyholders, due to the lockdown is minimal, by providing them uninterrupted support digitally, be it for honouring death claims related to COVID-19 or for servicing their policy. We reiterate that all life insurance companies stand by their customers in these difficult times and the customer should not be swayed by misinformation or misrepresentation. S.N. Bhattacharya, Secretary-General, Life Insurance Council
Padding Policyholders Policyholders were in a dilemma about the enforcement of the force majeure clause at the time of the pandemic. It is very crucial for common people as they are under constant threat of infection from the virus and they might have to bear medical expenses. Thus, since they have invested in a coverage policy they are expecting insurance companies to fulfill their contracts. Insurance Regulatory and Development Authority of India (IRDAI) has given relaxation of 30 days to the policyholder who has to pay their premium between March-April month of 2020. State-owned and private companies have taken all measures to keep smooth communication with their policyholders. Companies are making sure that they solve all concerns, queries, and confusion of policyholders.
Curiopedia
“Act of God” is one of the most common hazards which results in Force Majeure. The plot of the 2012 Bollywood movie “OMG – Oh My God!” is based upon this legal term.
The principles behind the force majeure clause originated in England. In Taylor v. Caldwell Case in 1861.
Life Insurance Corporation (LIC) proposed IPO this year, which will make LIC one of the most cash-rich companies in India.
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