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LAW OF INSURANCE

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Business Law
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LAW OF INSURANCE
INTRODUCTION :
- Risk and uncertainity are incidental to life
- Examples : Man may meet untimely death
accident
destruction of property
fire
sea perils
floods other natural perils
earthquakes
- uncertainity results in risk and insecurity protection against this resulted
in insurance
- Insurance does not avert or eliminate loss from uncertain events
but spreads the risk over a large number of people
- Principle pooling of risks
- a co-operative device to spread the loss of risk over a large number of persons
exposed to the risk
CONTRACT OF INSURANCE
- A contract of insurance is a contract by which a person in consideration of a sum
of money undertakes to make good the loss of another against a specified risk.
Eg. fire or happening of a specified event. Eg. accident or death
- Insurer - person undertaking the risk
(Assurer or
Underwriter)
- Insured - person whose loss is made good
(Assured)
- Premium - the consideration for which the Insurer undertakes to indemnify
- single or periodical
- Policy - the instrument in which the contract of insurance is embodied
- it is not the contract but evidence of it
- Subject matter of Insurance and Insurable Interest
the thing insured interest of the insured
- Perils insured against - Eg. death
- Kinds of Insurance
1) Life Insurance - payable on death or after a fixed period
2) Fire Insurance - covers loss in case of fire
3) Marine Insurance - covers losses incidental to marine adventure
4) Personal Accident Insurance - personal injury
- Insurance business in India is nationalised
- Life Insurance on 19.01.1956
- General Insurance on 13.05.1971

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NATURE OF CONTRACT OF INSURANCE
- socialises responsibility
- earlier degraded as a speculation
- it is an aleatory (depending on contingencies) contract
- depends on uncertain event but not a wagering agreement
DIFFERENCE BETWEEN INSURANCE AND WAGER
INSURANCE WAGER
1) a contract of indemnity no indemnity and covers no risk
except life, accident and sickness
2) object to protect against losses object to earn speculative gains
3) assured has a pecuniary or neither party has any pecuniary interest
insurable interest
4) of utmost good faith good faith not required
5) legally enforceable void-ab-initio
encouraged as it benefits the
community
6) scientific and acturial a gamble involving no scientific
calculation of risks calculation
7) causes varying degrees of either won or lost
loss or damage
- but a contract of insurance by way of wager is void
CONTRACT OF INSURANCE - A SPECIES OF GENERAL CONTRACT
- governed by general principles of contract
- offer and acceptance
- parties to agree on all material terms
- lawful object
- consent to be free and genuine
- supported by consideration
- embodied into a formal document called policy
- policy to be duly executed
FUNDAMENTAL ELEMENTS OF INSURANCE
1) Utmost good faith
- contracts uberrimae fidei i.e. disclosure of material facts - but not ones
after contract is entered into
- caveat emptor not applicable
- no ‘supressio veri’ or ‘suggetio falsi’ is a question of fact relevant to
each case
2) Indemnity
- Insurance a contract of Indemnity except, life, personal accident and
sickness
- applicable in fire, marine and burglary
- to be put in some financial position but not to make profit

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 LAW OF INSURANCE INTRODUCTION : - Risk and uncertainity are incidental to life - Examples : Man may meet untimely death accident destruction of property fire sea perils floods other natural perils earthquakes - uncertainity results in risk and insecurity  protection against this resulted in insurance - Insurance  does not avert or eliminate loss from uncertain events but spreads the risk over a large number of people - Principle  pooling of risks - a co-operative device to spread the loss of risk over a large number of persons exposed to the risk CONTRACT OF INSURANCE - A contract of insurance is a contract by which a person in consideration of a sum of money undertakes to make good the loss of another against a specified risk. Eg. fire or happening of a specified event. Eg. accident or death - Insurer - person undertaking the risk (Assurer or Underwriter) - Insured - person whose loss is made good (Assured) - Premium - the consideration for which the Insurer undertakes to indemnify - single or periodical - Policy - the instrument in which the contract of insurance is embodied - it is not the contract but evidence of it - Subject matter of Insurance and Insurable Interest the thing insured interest of the insured - Perils insured against - Eg. death - Kinds of Insurance 1) Life Insurance - payable on death or ...
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