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Alcohol and Insurance: There’s No Such Cocktail

Author: Vijaykumar Madhira/Wednesday, July 1, 2015/Categories: Insurance, Profit

Alcohol and Insurance: There’s No Such Cocktail

Over the past months,there has been an increased focus on the consumption of alcohol and its resultant actions which have resulted in most instances resulted in the loss of lives and properties. The most recent high profile case was that of a young woman coprorate lawyer in Mumbai allegedly mowing down two people while driving at an excessively high speed, in the wrong lane, after a late night alcohol binge. 

Speaking about alcohol, William Shakespeare said that “ It provokes the desire, but it takes away the performance”. It’s so very true and it is exactly for this reason that alcohol  has been in the news – although for all the wrong reasons!

Alcohol is wrongly thought to be a ‘stimulant’ as it gives people a feeling of confidence and fearlessness. However, on the contrary alcohol is in fact a ‘depressant’, which slows down the actions of the central nervous system of the body.  The mistaken feeling of confidence or fearless after one consumes  alcohol, is because the alcohol impacts the brain’s ‘warning system’ which helps in monitoring the behaviour. 

Insurance has been defined as a means of protecting financial losses arising out of unforeseen events / accidents. It is very clear that for insurance to be applicable the loss should arise out of an fortuitous event beyond the control of the individuals. However, consumption of alcohol impedes rational action. In almost all types of insurance covers it is a requirement to specifically declare the fact if one is a regular consumer of alcohol.

Alcohol And Vehicle Insurance 

Driving under the influence of alcohol is a serious offence as it could result in loss of life – either of the alcohol consumer or of a third party. Drunken driving is one of the main reasons for vehicle accidents and is among the biggest life-takers on Indian roads. 

As the quantity of alcohol in the bloodstream rises, the brain is affected, and one’s sense of judgment is skewed. At higher levels of intoxication, there are muscle control problems, blurred vision, and finally, a complete loss of physical co-ordination facilities. In India the permissible blood alcohol limit while driving light motor vehicle is 30mg for 100mg of blood.

Given these facts, driving, even with low alcohol levels can be very dangerous. 

In the event of an accident arising out of alcohol consumption, the law deals with offenders with great severity and punishments that range from a fine and/or imprisonment up to 6 months and the suspension of the driving license for at least six months.

In our country, in case of claims preferred by the affected third party, the claim will have to be paid by the insurer despite the driver being under the influence of alcohol. However, the courts reserve the right to decide who shall pay the damages - whether the owner of the vehicle or the insurance company and in all probability it could be the owner rather than the insurance company who will have to bear the payment. When it comes to the damage to the vehicle itself, this will not be payable by the insurance company as the damage occurred due to actions of the driver, who was drunk. 

Drink, drunk, drive, dead.

Alcohol and Health Insurance

One of the important questions that an insurer asks is about the consumption of alcohol and it is imperative to be honest and disclose all material facts so as to avoid confusions and hardships later. Quite a few insurers would either deny coverage for those who consume alcohol or have an extra charge for those who have discontinued the consumption in the past. 

It has been proven that alcohol consumption raises the risk of diseases arising out of changing “lifestyles” such as diabetes, kidney failure, cardiac arrests and strokes. Insurance companies consider people who consume alcohol as high-risk individuals and are therefore increasingly refusing to extend insurance coverage or are denying claims arising due to consumption of alcohol and intoxicating drinks. 

Alcohol and Life Insurance

While health insurance policies have certain exclusions which are clearly mentioned in the policy, life insurance policies do not have any such exclusions. So as to ensure that there is no ambiguity or confusion to the nominees / family members it is prudent if the individual spells out very clearly all material fact that may have a bearing on the insurance cover.

Addictions to either tobacco or any other intoxicant (alcohol included) have an adverse impact on the health of the individual. With this in mind, the insurer may decide to deny the insurance coverage or choose to load / increase the premium chargeable based upon the health reports and facts of the case. The period of addiction has a bearing on the case and even when one quits the insurer may consider the case on merits and at their discretion. This is because the effects of the addiction take a great deal of time to go away.

As can be seen from the above summation, the relationship between alcohol and insurance is one of “constant denial”. Insurance refuses to accept / recognise the consumption of alcohol and will in most instances refuse to pay for any loss / expense incurred due to the consumption of alcohol.

As Ralph Waldo Emerson said ‘There is this to be said in favor of drinking, that it takes the drunkard first out of society, then out of the world’. 

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