Ordinarily the premium once paid cannot be refunded. However, in the following cases the refund is allowed.
(i) By Agreement in the Policy
The assured may pay full premium while effecting the insurance but it may be agreed to return it wholly or partly in the happening of certain events. For example, special packing may reduce the risk.
(ii) For Reasons of Equity
(a) Non-attachment of risk : Where the subject-matter insured or part thereof, has never been imperiled for example, term insurance with returnable premium where premium is returned to the policy-holder if death does not occur during period of insurance.
(b) Undeclared balance of an open policy : The policy may be cancelled and premium may be returned for short interest allowed provided there was no further interest in the policy.
(c) Payment of Premium is apportionable : The apportioned part of the consideration is refundable when a part of policy interest is not involved. For example, insurance may be taken for a voyage in stages, each stage being rated separately. In such a case some stages are not completed the premium relating to incomplete stage is returnable.
(d) Where the assured has no insurable interest throughout the current of the risk, the premium is returnable provided the policy was not attached by way of wagering.
(e) Unreasonable delay in commencing the voyage may also entitle the insurer to cancel the insurance by returning the premium.
(f) Where the assured has over-insured under an unvalued policy a proportionate part of the premium is returnable.
(iii) Over-insurance by Double Insurance
If there is over-insurance by double insurance , a proportionate part of the several premium is returnable provided that if the policies are taken at different times and any earlier policy has at any time born the entire risk or if a claim has been paid .
On the policy in respect of the full insured thereby, no premium is returnable in respect of that policy and when double insurance is effected knowingly by the assured no premium is returnable.