Section 64VB and the Cash and Carry Rule
No premium, no cover. What section 64VB says clause by clause, after the 2025 amendment.
India is a "cash and carry" insurance market: no premium, no cover. Section 64VB of the Insurance Act 1938 says an insurer shall not assume any risk in India unless and until the premium has been received, or guaranteed, or a deposit has been made in advance, in the manner the law prescribes.
The rule protects both sides. The insurer is not left chasing premium after a loss, and a policyholder cannot be told after a fire that the cover was never really paid for. For an underwriter, it means the date cover starts is never earlier than the date the money arrives.
You save ₹300
- Full 100-question mocks
- Chapter-wise practice
- Section-wise sets
One payment, no subscription
What Section 64VB Says, Clause by Clause
- 1
64VB(1): no risk without premium
No risk may be assumed until the premium is received, or guaranteed to be paid in the prescribed manner and time, or a prescribed deposit is made in advance.
- 2
64VB(2): when cover can start
Where the premium can be worked out in advance, the risk can start no earlier than the date the premium is paid in cash or by cheque. If the premium is sent by postal money order or posted cheque, the date of booking or posting counts. Since the 2025 amendment, for online payment the date the money reaches the insurer's bank account counts.
- 3
64VB(3): refunds go to the insured
A refund of premium on cancellation or change of terms is paid directly to the insured and never credited to the agent's account.
- 4
64VB(4): agent remits within 24 hours
An agent who collects premium must deposit or dispatch it to the insurer in full, without deducting commission, within 24 hours of collection, excluding bank and postal holidays.
- 5
64VB(5) and (6): relaxations and manner
The central government may relax sub-section (1) by rules for particular categories of policies, and IRDAI may specify the manner of receipt of premium by regulations.
Worked Examples
| Situation | When cover can start |
|---|---|
| A Surat trader pays fire premium by UPI at 4 pm on 10 March | From the date the money is received in the insurer's bank account |
| A Pune contractor posts a cheque on 2 June; it reaches the insurer on 5 June | From 2 June, the date the cheque was posted |
| A Bengaluru rider asks for cover "from today" and promises to pay next week | Not today. Cover starts only once premium is received or a permitted guarantee or deposit is in place |
| A cheque is dishonoured | The premium was never received, so the insurer treats the cover as never having started; check the policy and the insurer's cheque-dishonour terms |
Quick practice on risk inspection and hazards. No signup.
Where Older Material May Differ
The courseware (Revised Edition 2023) was written before the 2025 amendment added online payment to section 64VB(2), and it may cite the IRDA (Manner of Receipt of Premium) Regulations 2002. Those regulations were repealed by IRDAI's Protection of Policyholders' Interests Regulations 2024, which now say premium may be paid in the manner prescribed in the Insurance Rules 1939, by any mode the RBI recognises, or as IRDAI specifies. The detailed cases for bank guarantees, deposits and instalments sit in the Insurance Rules and the insurer's filed product; check the current text before quoting a list.
How IC-11 Tests This
Expect "section 64VB relates to" (advance payment of premium), "cash and carry means cover starts" (only on payment), and the 24-hour remittance by agents. The trap is the posting rule: for a posted cheque the risk can start on the date of posting, not the date the insurer receives it. A second trap is refunds: candidates route them through the agent, which the section forbids.
FAQs
What is section 64VB of the Insurance Act?expand_more
The rule that no insurer may assume a risk in India until the premium is received, or guaranteed, or deposited in advance in the prescribed way. It is why India is called a cash and carry insurance market.
What does cash and carry mean in insurance?expand_more
Cover starts only after the premium is paid. There is no credit period for premium on Indian risks, apart from the guarantee and deposit routes the law allows.
Within how many hours must an agent deposit premium with the insurer?expand_more
Within 24 hours of collection, excluding bank and postal holidays, in full and without deducting commission (section 64VB(4)).
When does cover start if premium is paid online?expand_more
Under the Explanation to section 64VB(2), as amended in 2025, the risk can be assumed from the date the money is received in the insurer's bank account.
Next steps
- Intermediariesarrow_forward
- Policy Conditionsarrow_forward
- IC-01: Insurance contract essentialsarrow_forward
Full-length IC-11 practice, timed to 2 hours and scored.