Territory and Jurisdiction in Insurance Policies

 

On scrutinizing a policy one can get an understanding of the cover offered, period of insurance and other aspects of the policy are covered.  On close examination of the policy the territory and jurisdiction are mentioned as India. Till the recent past, these limits were hardly significant in an insurance claim. However, the significance of the terms holds relevance in the global scenario today. Let us look at these aspects in more detail and why they have gained significance today.

What is territory limit in an insurance policy?

Territory limit is the area where the policy will provide cover to the policyholder. Insurance policies are generally issued with India as the territory. This means that the country of operation for business, residence, travel, transits and other insurance covers is India.

Suppose someone who is travelling outside India requires a cover for extended territory then he has to place the request with the insurance company and they may consider extending the cover to the specific country as requested at an additional premium.

Common policies where extension of territory is required

Professional indemnity insurance policies usually exclude any work undertaken outside India because the claims that will ensue are higher and defense costs will increase in relation to the currency rate. However, if the professional or corporates request for such an extension, they can be considered but on payment of higher premiums.

Product liability policies are covered worldwide and the policyholder may be held liable for injuries or damage, or both, caused by defective or spurious products.

Motor policies allow extension of the geographical areas to Bangladesh, Bhutan, Nepal, Pakistan, Sri Lanka and the Maldives for an additional premium regardless of vehicle size.

However, these geographical extensions exclude vehicle damage, injury to its passengers, and third-party liability for the vehicle during air travel or sea travel for the purpose of ferrying the vehicle to the extended geographical area. Damage by road, rail, waterway, and airlift during transit is protected within Indian borders and includes these countries as mentioned.

Overseas health policies cover the insured against any illnesses he may get while on tour in a foreign country, with the restriction of PED (preexisting disease).  In such a case, the policyholder is entitled to the benefits of the policy and can get medical care provided all requirements of the policy are met.

What are jurisdiction limits?

Jurisdiction limits are inclusive of the countries where the insurance policy will accept the legal action against the policyholder. With jurisdiction limits disputes over where claims should be handled can be avoided.

Jurisdiction limits on a policy are usually the same as territorial limits. Any specific requirements can be considered by the insurance companies based on merit. Jurisdiction is the applicable laws of which country and so on. Legal aspects if any of a claim will be interpreted according to the laws of the land, specified as jurisdiction.

However, most plans restrict coverage to Indian territory only, and the claim will be paid in Indian rupees only.

 

Territory and jurisdiction are two important aspects of insurance policies that determine its coverage, claim payment and disputes related to a claim. It is important to know about these aspects when taking a related insurance policy.

 

We at Zen insurance assist in choosing the right Insurance cover to suit your needs. Please contact us for assistance.

 

 Disclaimer:   

 Zen Insurance Brokers is an IRDAI registered broker which facilitates quick & accurate insurance broking services. We deal with only regulator approved products of insurers. We do not underwrite the products.