Conditions of insurance

The following are some of the statutory requirements of insurance coverage:

• If the person applying for insurance gives false information about the car being insured or fails to disclose important information, or if the insured violates the terms of the contract or commits fraud, then the claim by the insured may be invalid, and they may forfeit their right to recover indemnity.

• Any statement made by the applicant can only be used in defence of a claim under the contract if it's included in the signed written application or in a part of the policy that the applicant endorsed.

• If the insurer wants to use a statement from a purported copy of the application, they need to prove that the applicant actually made that statement. However, only statements describing the risk and extent of insurance can be used as evidence in defence of a claim under the contract.

• The insured must promptly notify the insurer in writing of any change in the risk that is material to the contract and within their knowledge. This includes any changes to the insurable interest in the automobile, such as:

  • sale or assignment, as well as

  • any mortgages, liens, or encumbrances on the automobile and

  • any other insurance that covers the same interest.

• There are several situations in which the insured is not permitted to drive or operate the automobile, including while their license is suspended or while they are under the minimum age to drive. The insured is also prohibited from allowing someone else to use the automobile unless that person is authorized by law or qualified to drive or operate the automobile.

• The insured must allow the insurer to inspect the automobile and its equipment at any reasonable time.

• The insurer's liability for damages is limited to the cost of repair or replacement with materials of the same nature and quality as the original. If a part is obsolete or unavailable, the insurer is only required to pay the value of the part at the time of the loss, up to the manufacturer's last current price.

• The insurer can choose to repair, rebuild or replace damaged property instead of paying cash, with written notice to the insured within seven days of receiving proof of loss.

• The insured cannot abandon the automobile to the insurer without the insurer's consent. If the insurer chooses to replace the automobile or pay its actual cash value, the insurer has the right to salvage it if applicable.

• Disputes over the amount or nature of required repairs or replacement will be resolved through arbitration as per the provisions of the insurance law, before any compensation is provided.

• The insurer has the right to inspect the automobile and its accessories at a suitable time and place.

• Insurance money for which the insurer is liable must be paid within 60 days after receiving proof of loss or, where an appraisal is made, within 15 days after the award is rendered by the appraisers.

• The insured must comply with statutory conditions 3 and 4 and ascertain the amount of the loss before bringing an action to recover the amount of a claim under the contract.

• Notice of claim and proof of claim may be made by the agent of the insured named in the contract or by a person to whom any part of the insurance money is payable, in case of the insured's absence, inability, or refusal.

• Every action or proceeding against the insurer under the contract in respect of loss or damage to the automobile or to persons or property must be commenced within two years from the time when the loss or damage was sustained and not afterwards.

• The contract may be terminated, and the insured must provide written notice to the insurer if they wish to cancel the contract.

There are a few exceptions to these rules, if a contract doesn't insure against certain types of loss or damage, the corresponding statutory conditions may be omitted from the policy.

YK Insurance Act s.136-138