A business owner may have a fleet of cars, lorries, vans which are used on a daily basis for his business-related activities. Managing all these vehicles can be expensive and hence is vital to ensure all the vehicles for proper business continuity. A motor fleet insurance policy is to provides coverage to all the vehicles of the insureds under one policy. When a business owner or an individual bulk buys a motor fleet insurance policy from a single insurance company or an insurer, the process becomes more manageable and cost-effective for him. Cost-effectiveness comes in the form of non-claim bonuses or discounts that the insured gets.
A motor fleet insurance policy comes with a sunset clause. The sunset clause applies after the expiration period of the motor fleet insurance policy.
If an insured takes a motor fleet insurance policy for five years, then any claims arising during the policy period of five years can be successfully settled by the insurance company. However, according to the sunset clause, an additional period of two to three years (may vary according to the insurance company) is given by the insurance company, within which the claim can be settled even if the policy period has expired. Thus, the sunset clause provides a time limit till which a claim can be reported and considered for coverage.
The insurers or the insurance company will respond only to the losses reported within the pre-determined date according to the sunset clause. So, if the motor fleet insurance policy has a sunset clause of 2 years then after two years cannot report and settle any claim under this policy.
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Case Study:
Madhav, a restaurant owner, started his business in 2003. He initially began with a single restaurant in Pune. After two years, his business flourished, and the restaurant door saw more and more customers every day. Due to the ample response in the Pune region and positive word of mouth, he decided to start his restaurant chain in Mumbai and Nashik. As his business expanded, his fleet of vehicles for the business also expanded. He required more vans and motorbikes for transportation of raw materials and delivery of food respectively. The total number of vehicles under his business was ten. In order to protect his vehicles against any loss or damage caused by fire, burglary, unexpected causes, or natural calamity, he decided to insure his vehicles with a motor fleet insurance policy.
He contacted a reliable insurance company and insured all his vehicles under this single insurance policy. The policy period for his insurance was of five years and would expire in the year 2009.
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One day, while getting the raw materials to his Pune-based restaurant, one of the vans met with an accident. This incident took place on 12th June 2010. The driver of the van was safe; however, it caused damage to the van. Madhav, the owner immediately contacted his insurance company. The insurance company investigated the matter.
The insurers found that:
- The driver was not under any influence of drugs
- Covered the van under the motor fleet insurance policy, and all the documents were in place.
- The policy had expired in the year 2009. However, the policy had a sunset clause of 2 years.
According to the sunset clause mentioned in the policy, Madhav could file for a claim up to 2 years from the expiry period of the policy. Since the accident took place in the year 2010, it was well before the two years cap.
Also, Madhav produced all the required documents to the insurance company on time. Hence he was able to successfully settle his claim for the damaged van due to the sunset clause available in his policy.
