Insurance CONTRACTS Presented By: Group – 14, Sec- B Aritra Banerjee (2010PGP062) Anirban Chakraborty(2010PGP043) Satvik S...
Agenda
Introduction <ul><li>Concept prevalent in India since ancient times amongst Hindus </li></ul><ul><li>Overseas traders prac...
Terminology <ul><li>Contract of insurance </li></ul><ul><ul><li>It  is a contract by which a person, in consideration of a...
Terminology  contd. <ul><li>Policy </li></ul><ul><ul><li>It  is the instrument in which the contract of assurance is gener...
Terminology  Contd. <ul><li>Cover note </li></ul><ul><ul><li>It is the document issued by the insurer or underwriter on re...
Kinds of Insurance <ul><li>Life insurance </li></ul><ul><li>Fire insurance </li></ul><ul><li>Marine insurance </li></ul><u...
Life Insurance <ul><li>Also known as “life assurance” </li></ul><ul><li>Is a contract whereby the insurer undertakes to pa...
Life Insurance  contd. <ul><li>Written form of contract is known as life insurance policy  </li></ul><ul><li>It provides f...
Types of life assurance policies <ul><li>Whole-life policy  </li></ul><ul><ul><li>Runs for the whole life of the insured a...
Fire Insurance <ul><li>Is a contract whereby the insurer, on payment of premium by the insured, undertakes to compensate t...
Marine Insurance <ul><li>Contract by which the insurance company (underwriter) agrees to indemnify the owner of a ship or ...
Other Types of Policies <ul><li>Motor Vehicle Insurance </li></ul><ul><ul><li>Covers the risk of damage of the vehicle by ...
Other Types of Policies  contd. <ul><li>Fidelity Insurance </li></ul><ul><ul><li>Covers the risks of loss on account of em...
Agenda
Nature of the Contract of Insurance <ul><li>Insurance is   </li></ul><ul><ul><li>Law’s attempt to socialize responsibility...
Special Characteristics of Insurance Contract <ul><li>Adhesion Contract </li></ul><ul><ul><li>Insured must accept the enti...
Special Characteristics of Insurance Contract  contd. <ul><li>Aleatory Contract </li></ul><ul><ul><li>The values exchanged...
Agenda
Utmost Good Faith <ul><li>Uberrimae fidei( of the fullest confidence) :  Contracts where party possessing  knowledge of a ...
Utmost Good Faith  contd. <ul><li>The burden of proof to show non-disclosure or misrepresentation is on the insurance comp...
Misrepresentation <ul><li>Representations are statements: </li></ul><ul><ul><li>made by one party to the other </li></ul><...
Misrepresentation  contd. <ul><li>Conditions for which misrepresentation is established as willful are: </li></ul><ul><ul>...
Indemnity <ul><li>Most insurance policies, except life and personal accident, are contracts of indemnity whereby the insur...
Indemnity  contd. <ul><li>A contract of marine insurance is an agreement whereby the insurer undertakes to indemnify the i...
INSURABLE INTEREST <ul><li>Distinguished from a wagering agreement </li></ul><ul><li>An interest such that the risk would ...
<ul><li>Varies depending on nature of insurance </li></ul><ul><ul><li>Controversy between spouses </li></ul></ul><ul><ul><...
<ul><li>George E. Rejda  says </li></ul><ul><li>“ subrogation means substitution of the insurer in place of the insured fo...
<ul><li>Insurer’s right of subrogation arises only when he pays for the loss for which he is liable under the policy </li>...
<ul><li>Where the assured insured the same risk with two or more independent insurers </li></ul><ul><li>If total sum excee...
<ul><li>When there are two or more insurers on one risk, the principle of contribution applies as between different insure...
SUBROGATION V/s CONTRIBUTION SUBROGATION CONTRIBUTION Loss shifts from one person to another Loss is distributed among the...
Proximate Cause <ul><li>Principle of cause and effect –  “Causa Proxima non remota spectator “ </li></ul><ul><li>Proximate...
Application of the Doctrine <ul><li>It is ,not the latest , but the direct dominant ,operative and efficient cause that mu...
Modification of the doctrine <ul><li>In the event of loss , the burden of the proof is on the insured </li></ul><ul><li>In...
Value of the doctrine <ul><li>This doctrine serves not only to define the scope of the coverage under the contract but ser...
Mitigation of Loss <ul><li>In the event of some mishap to the insured property , the assured must take all necessary steps...
Commencement Of Policy <ul><li>As per Indian Contract Act , the party to whom offer has been made should accept it uncondi...
Period  of insurance <ul><li>Life Insurance </li></ul><ul><ul><li>Continuing contract with a condition that the premium is...
Re-Insurance <ul><li>When risk insured is beyond the capacity of insurer </li></ul><ul><li>Insurer may insure the same ris...
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2010 11 pgp1-lab_written report_section_b_group 14_26-11-2010

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LEGAL ASPECTS OF BUSINESS

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  • Wagering Agreement – in which person promises to pay money or transfer property upon the happening or non-happening of an uncertain event
  • Caveat emptor:  the buyer cannot recover from the seller for defects on the property that rendered the property unfit for ordinary purposes
  • 2010 11 pgp1-lab_written report_section_b_group 14_26-11-2010

    1. 1. Insurance CONTRACTS Presented By: Group – 14, Sec- B Aritra Banerjee (2010PGP062) Anirban Chakraborty(2010PGP043) Satvik Shelar(2010PGP341) Harisankar R(2010PGP121) Shiv Kumar(2010PGP361)
    2. 2. Agenda
    3. 3. Introduction <ul><li>Concept prevalent in India since ancient times amongst Hindus </li></ul><ul><li>Overseas traders practised a system of marine insurance </li></ul><ul><li>Joint family system - method of social insurance of every member of the family on his life </li></ul><ul><li>Law relating to insurance - from nationalization to the recent reforms permitting entry of private players and foreign investment </li></ul><ul><li>Insurance is included in the Union List - the law relating to insurance is uniform throughout the territory of India </li></ul>
    4. 4. Terminology <ul><li>Contract of insurance </li></ul><ul><ul><li>It 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 </li></ul></ul><ul><ul><li>It is also a contract to compensate him or his estate on happening of a specified event </li></ul></ul><ul><li>Insurer and Insured </li></ul><ul><ul><li>The person undertaking the risk is called insurer, assurer or underwriter </li></ul></ul><ul><ul><li>The person whose loss is to be made good is called the insured or assured </li></ul></ul><ul><li>Premium </li></ul><ul><ul><li>Consideration for which the insurer undertakes to indemnify assured against the risk. It may either be single or a periodical payment </li></ul></ul>
    5. 5. Terminology contd. <ul><li>Policy </li></ul><ul><ul><li>It is the instrument in which the contract of assurance is generally embodied </li></ul></ul><ul><ul><li>The policy is not the contract. It is the evidence of the contract </li></ul></ul><ul><li>Subject matter of insurance </li></ul><ul><ul><li>The thing or property insured is called the subject matter of insurance </li></ul></ul><ul><li>Insurable interest </li></ul><ul><ul><li>The interest of the assured in the subject matter is called his insurable interest </li></ul></ul><ul><li>Perils insured against </li></ul><ul><ul><li>That which is insured against is the loss arising from uncertain events or casualties </li></ul></ul>
    6. 6. Terminology Contd. <ul><li>Cover note </li></ul><ul><ul><li>It is the document issued by the insurer or underwriter on receiving a proposal pending the execution of the policy </li></ul></ul><ul><ul><li>The liability of the insurer under the cover note ceases when he intimates to the assured the rejection of the proposal </li></ul></ul>
    7. 7. Kinds of Insurance <ul><li>Life insurance </li></ul><ul><li>Fire insurance </li></ul><ul><li>Marine insurance </li></ul><ul><li>Other types of insurance </li></ul>
    8. 8. Life Insurance <ul><li>Also known as “life assurance” </li></ul><ul><li>Is a contract whereby the insurer undertakes to pay a certain sum either on the death of the insured or on the expiry of a certain number of years </li></ul><ul><li>The insured agrees to pay an amount as premium either in a lump sum or in periodical instalments, annually or half-yearly. </li></ul><ul><li>Risk insured against is certain to happen; hence, life insurance is also referred to as life assurance </li></ul>
    9. 9. Life Insurance contd. <ul><li>Written form of contract is known as life insurance policy </li></ul><ul><li>It provides for the payment of a fixed sum to the insured either on a fixed date or on the happening of an event, which is certain. </li></ul><ul><li>Businessmen can provide for life insurance of all their employees by way of group insurance </li></ul><ul><li>Develops loyalty among employees and can be used as a security for raising loans </li></ul>
    10. 10. Types of life assurance policies <ul><li>Whole-life policy </li></ul><ul><ul><li>Runs for the whole life of the insured and premium is payable all along. The sum assured becomes due for payment to the heirs of the insured only after his death </li></ul></ul><ul><li>Endowment Policy </li></ul><ul><ul><li>Runs for a limited period or up to a certain age of the insured. The sum assured becomes due for payment at the end of the specified period or on the death of the insured, if it occurs earlier </li></ul></ul>
    11. 11. Fire Insurance <ul><li>Is a contract whereby the insurer, on payment of premium by the insured, undertakes to compensate the insured for the loss or damage suffered by reason of certain defined subject matter being damaged or destroyed by fire </li></ul><ul><li>Is a contract of indemnity - the insured cannot claim anything more than the value of property lost or damaged by fire or the amount of policy, whichever is lower </li></ul><ul><li>The claim for loss by fire is payable subject to the following two conditions </li></ul><ul><ul><li>there must have been actual fire </li></ul></ul><ul><ul><li>fire must have been accidental, not intentional; the cause of fire being immaterial </li></ul></ul><ul><li>The insured is entitled to be compensated for the amount of actual loss suffered </li></ul>
    12. 12. Marine Insurance <ul><li>Contract by which the insurance company (underwriter) agrees to indemnify the owner of a ship or cargo against risks, which are incidental to marine adventures </li></ul><ul><li>Also includes insurance of the risk of loss of freight due on the cargo </li></ul><ul><li>All marine contracts are contracts of indemnity </li></ul><ul><li>Cargo insurance - covers the risk of loss of cargo by storm </li></ul><ul><li>Hull insurance - covers the loss of the ship on account of perils of the sea </li></ul><ul><li>Freight insurance - covers the risk of loss of freight if the cargo is damaged or lost </li></ul>
    13. 13. Other Types of Policies <ul><li>Motor Vehicle Insurance </li></ul><ul><ul><li>Covers the risk of damage of the vehicle by accident or loss by theft </li></ul></ul><ul><ul><li>Also covers risks of liability arising out of injury or death of third party involved in an accident </li></ul></ul><ul><ul><li>Third party risk insurance is compulsory under the Motor Vehicles Act </li></ul></ul><ul><li>Personal Accident Insurance </li></ul><ul><ul><li>The amount payable is a compensation for any personal injury caused to the assured </li></ul></ul><ul><li>Burglary Insurance </li></ul><ul><ul><li>The insurance company undertakes to indemnify the insured against losses from burglary i.e., loss of moveable goods by robbery and theft by breaking the house </li></ul></ul>
    14. 14. Other Types of Policies contd. <ul><li>Fidelity Insurance </li></ul><ul><ul><li>Covers the risks of loss on account of embezzlement or defalcation of cash or misappropriation of goods by employees handling cash or in charge of stores </li></ul></ul><ul><ul><li>Employees may also be required to sign a fidelity guarantee bond </li></ul></ul>
    15. 15. Agenda
    16. 16. Nature of the Contract of Insurance <ul><li>Insurance is </li></ul><ul><ul><li>Law’s attempt to socialize responsibility </li></ul></ul><ul><ul><li>A “contract on speculation” which in the legal sense means a wagering agreement– Lord Mansfield </li></ul></ul><ul><ul><li>An aleatory contract but not a wagering agreement </li></ul></ul><ul><ul><li>Recognized by law as a system of sharing risk too great to borne by one individual or one party </li></ul></ul><ul><ul><li>A species of general contract and governed by the same principles of law as other contracts </li></ul></ul><ul><ul><li>The proposal made by one party(insured) to the other party (insurer) for insurance against some loss which should occur on the happening of an uncertain event within a limited time. Insurer has to accept the offer for it to be a valid one </li></ul></ul>
    17. 17. Special Characteristics of Insurance Contract <ul><li>Adhesion Contract </li></ul><ul><ul><li>Insured must accept the entire contract with all its terms and conditions which are fixed by the insurer. It is highly specialized and technical in nature and prevents it from being a bargaining contract </li></ul></ul><ul><li>Conditional Contract </li></ul><ul><ul><li>The insurer’s obligation to pay a claim depends upon the conditions inserted in the policy. e.g.- payment of premiums, proof of death </li></ul></ul><ul><li>Unilateral Contract </li></ul><ul><ul><li>Only one party, the insurer, gives a legally enforceable promise and the insured party cannot be legally forced to pay the premiums. But the insurer is bound to accept them and provide protection to the insured when they pay premiums in timely manner </li></ul></ul>
    18. 18. Special Characteristics of Insurance Contract contd. <ul><li>Aleatory Contract </li></ul><ul><ul><li>The values exchanged may not be equal but involves the element of chance or an uncertain event. In this one party may receive more in value than the other </li></ul></ul><ul><li>Personal Contract </li></ul><ul><ul><li>It is a personal contract between the insurer and the insured. The insurer insures the owner of the property against loss but not the property. Insured property is indemnified if there is any loss and it cannot be assigned to another party without the insurer’s content </li></ul></ul>
    19. 19. Agenda
    20. 20. Utmost Good Faith <ul><li>Uberrimae fidei( of the fullest confidence) : Contracts where party possessing knowledge of a material fact should make a full disclosure </li></ul><ul><li>Caveat emptor(let the buyer beware) does not apply here </li></ul><ul><li>Insurance is a contract Uberrimae fidei i.e contract of utmost good faith </li></ul><ul><li>Both parties of contract are required to observe utmost good faith and should disclose every material fact known to them. </li></ul><ul><li>Assured knows more about the subject matter of contract than insurer, hence he is on the vantage ground. </li></ul><ul><li>He needs to disclose everything material in order for insurer to judge </li></ul><ul><ul><li>Whether he should accept the risk </li></ul></ul><ul><ul><li>What premium he should charge. </li></ul></ul><ul><li>Where the assured does not make the necessary disclosure, the insurer can avoid the contract </li></ul>
    21. 21. Utmost Good Faith contd. <ul><li>The burden of proof to show non-disclosure or misrepresentation is on the insurance company. </li></ul><ul><li>No material alteration can be made to the terms of the contract without the mutual consent of the parties. </li></ul><ul><li>Insurer also is under obligation to disclose all material facts. </li></ul><ul><li>Insurer cannot subsequently demand additional premium nor can he escape liability by contending that the situation does not warrant the insurance cover. </li></ul><ul><li>Insurance policy cannot be called in question after it has been in force for two years. </li></ul><ul><li>However , this is not applicable when the statement was made fraudulently. </li></ul><ul><li>E.g. The Marine Insurance Act, 1963 </li></ul>
    22. 22. Misrepresentation <ul><li>Representations are statements: </li></ul><ul><ul><li>made by one party to the other </li></ul></ul><ul><ul><li>either prior to or while entering into an insurance contract </li></ul></ul><ul><ul><li>of some matter or circumstances relating to it and </li></ul></ul><ul><ul><li>which is not an integral part of the contract </li></ul></ul><ul><li>These statements are said to have fulfilled there obligations when the final acceptance on the policy is conveyed </li></ul><ul><li>If representation are made an integral part of the contract , they become warranties and , in case of being untrue, policy can be avoided </li></ul><ul><li>A policy of insurance cannot be called in question on the grounds of misrepresentation after a period of two years from the commencement of the policy </li></ul>
    23. 23. Misrepresentation contd. <ul><li>Conditions for which misrepresentation is established as willful are: </li></ul><ul><ul><li>The statement must be on a material matter or must suppress facts where it was material to disclose. </li></ul></ul><ul><ul><li>The suppression must be fraudulently made by the policy holder; and </li></ul></ul><ul><ul><li>The policy-holder must have known at the time of making the statement that it was false or that it suppressed facts where it was material to disclose. </li></ul></ul><ul><li>All these conditions are required to be proved cumulatively by the insurer. </li></ul><ul><li>While determining the suppression of material fact, it is necessary to ascertain if </li></ul><ul><ul><li>the fact is in the exclusive knowledge of the person and </li></ul></ul><ul><ul><li>also that it could not be ascertained by reasonable enquiry by a prudent person. </li></ul></ul>
    24. 24. Indemnity <ul><li>Most insurance policies, except life and personal accident, are contracts of indemnity whereby the insurer undertakes to indemnify the insured for the actual loss suffered by him as a result of the event insured against </li></ul><ul><li>E.g . Fire, marine, burglary insurances </li></ul><ul><li>Object is to place the assured in the same financial position, as nearly as possible, after the loss as if the loss had not taken place at all </li></ul><ul><li>Against public policy to allow an assured to make profit out of the happening of the loss or damage insured against </li></ul><ul><li>This is to prevent the moral hazard of the assured himself bringing about event insured against to get the money </li></ul><ul><li>In absence of the principle of indemnity, there might be a tendency to over-insure </li></ul><ul><li>Even with the maximum limit , the insured cannot recover more than what he establishes to be his actual loss </li></ul>
    25. 25. Indemnity contd. <ul><li>A contract of marine insurance is an agreement whereby the insurer undertakes to indemnify the insured to the extent agreed upon. </li></ul><ul><li>Amount of indemnity is limited by certain conditions: </li></ul><ul><ul><li>Injury or loss sustained by the insured has to be proved. </li></ul></ul><ul><ul><li>The indemnity is limited to the amount specified in the policy. </li></ul></ul><ul><ul><li>The insured is indemnified only for the proximate causes. </li></ul></ul><ul><ul><li>The market value of the property determines the amount of indemnity. </li></ul></ul><ul><li>Life insurance is not a contract of indemnity. </li></ul><ul><li>It is a valued policy i.e. the insurer agrees to pay the sum of money mentioned in the policy upon happening of the contingency irrespective of the actual economic loss suffered. </li></ul>
    26. 26. INSURABLE INTEREST <ul><li>Distinguished from a wagering agreement </li></ul><ul><li>An interest such that the risk would by its proximate effect cause damage to the assured, that is to say, cause him to loose a benefit or incur a disability </li></ul><ul><li>Validity of an insurance contract depends on the existence of insurable interest in the subject matter </li></ul><ul><li>Person seeking an insurance policy must establish some kind of interest in the life or property to be insured, in the absence of which the policy would amount to wager and consequently void in nature </li></ul><ul><li>Test to find if there is an insurable interest- If loss is pecuniary ? </li></ul><ul><li>Person having a limited interest can also insure such interest </li></ul>
    27. 27. <ul><li>Varies depending on nature of insurance </li></ul><ul><ul><li>Controversy between spouses </li></ul></ul><ul><ul><li>Creditor in debtor </li></ul></ul><ul><ul><li>Employee in an employer </li></ul></ul><ul><li>Existence of insurable interest at the time of happening of the event </li></ul>INSURABLE INTEREST (Contd…) Type of InsuranceExistence of Insurable Interest At the time of taking the policy At the time of happening of the event Life and Personal Accident Should be present Need not be present Fire and Motor Accident Should be present Should be present
    28. 28. <ul><li>George E. Rejda says </li></ul><ul><li>“ subrogation means substitution of the insurer in place of the insured for the purpose of claiming indemnity from a third person for a loss covered by insurance “ </li></ul><ul><li>Purpose of subrogation </li></ul><ul><ul><li>To prevent the insured from collecting twice for same loss </li></ul></ul><ul><ul><li>To hold the negligent person responsible for the loss </li></ul></ul><ul><ul><li>To hold down insurance rates </li></ul></ul><ul><li>Rights conferred by the doctrine of subrogation on the insurer </li></ul><ul><ul><li>Insurer entitled to only the rights and remedies which the insured has against the third party </li></ul></ul><ul><ul><li>Insurer is entitled to the benefits received by the assured from the third party with a view to compensate himself for the loss </li></ul></ul>SUBROGATION
    29. 29. <ul><li>Insurer’s right of subrogation arises only when he pays for the loss for which he is liable under the policy </li></ul><ul><li>The insurer is not entitled to the benefit of what is recovered until the insured has received the full indemnity </li></ul><ul><li>Insured would be entitled to only the extent of his loss in case of subrogation </li></ul><ul><li>Subrogation related only to contracts of indemnity </li></ul><ul><li>This follows that subrogation does not apply to life insurance and to most individual health insurance contracts </li></ul>SUBROGATION contd.
    30. 30. <ul><li>Where the assured insured the same risk with two or more independent insurers </li></ul><ul><li>If total sum exceeds the actual value of the subject matter , assured is said to be over-insured by double insurance </li></ul><ul><li>In case of loss, assured cannot recover more than actual amount of loss </li></ul><ul><li>Assured has a right to claim payment in any order from the insurers </li></ul><ul><li>If assured recovers more than the value of his interest in case of loss, he holds the excess amount as a trustee according to insurer’s respective rights inter se </li></ul><ul><li>Insurers as between themselves are liable to contribute to the loss in proportion to the amount for which each one is liable </li></ul><ul><li>In case of life insurance, any number of policies can be taken by assured for any amounts </li></ul>DOUBLE INSURANCE
    31. 31. <ul><li>When there are two or more insurers on one risk, the principle of contribution applies as between different insurers </li></ul><ul><li>Rights of contribution arises when </li></ul><ul><ul><li>There are different policies which relate to the same subject matter </li></ul></ul><ul><ul><li>Policies cover the same peril which caused the loss </li></ul></ul><ul><ul><li>All the policies are in force at the time of loss </li></ul></ul><ul><ul><li>One of the insurers has paid to the assured more than his share of the loss </li></ul></ul><ul><li>Subrogation and contribution arise only in property insurance </li></ul>CONTRIBUTION
    32. 32. SUBROGATION V/s CONTRIBUTION SUBROGATION CONTRIBUTION Loss shifts from one person to another Loss is distributed among the insurers It is against third party It is in between insurers One insurer and one policy More than one insurer The right of the insured is claimed The right of the insurer is claimed
    33. 33. Proximate Cause <ul><li>Principle of cause and effect – “Causa Proxima non remota spectator “ </li></ul><ul><li>Proximate and not the remote cause shall be taken as the cause of the loss </li></ul><ul><li>If the proximate cause of the loss is a peril insured against , the insured can recover the amount of the loss from the insurer </li></ul><ul><li>Compensation only for Insured perils mentioned in policy but not for uninsured and expected or excluded perils. </li></ul><ul><li>Question of causa proxmia arises only when there is a succession of causes. </li></ul><ul><li>Proximate does not mean the ‘nearest in time’ but the cause which is ‘proximate in efficiency ‘ </li></ul><ul><li>Choice of real or efficient cause out of whole complex facts made by applying common sense standards </li></ul><ul><li>If the loss is brought about by any cause attributable to the misconduct of the assured , the insurer is not liable </li></ul>
    34. 34. Application of the Doctrine <ul><li>It is ,not the latest , but the direct dominant ,operative and efficient cause that must be regarded as proximate </li></ul><ul><ul><li>If there are concurrent causes and no excluded peril is involved there is liability under the policy </li></ul></ul><ul><ul><li>When insured and expected peril operate together to produce the loss , the claim is outside the scope of the policy </li></ul></ul><ul><ul><li>If results of the operation of the peril can be easily separated from the effects of excluded perils , then there is liability under the policy </li></ul></ul><ul><ul><li>Where several events occur in unbroken sequence and no expected peril is involved , the insurer is liable for all losses resulting from the insured peril </li></ul></ul><ul><ul><li>If an expected peril precedes the happening of an insured peril , there is no claim </li></ul></ul><ul><ul><li>If the insured peril is followed by an expected peril , there is valid claim for part of the loss </li></ul></ul><ul><ul><li>If happening of expected peril is followed by the occurrence of an insured peril , as a new and independent cause , there is a valid claim for the loss caused by the happening of an expected peril </li></ul></ul>
    35. 35. Modification of the doctrine <ul><li>In the event of loss , the burden of the proof is on the insured </li></ul><ul><li>Insured has to prove that his loss is caused by an insured peril </li></ul><ul><li>The onus shifted to the insurer , if insurer argues that the loss was caused by an expected peril </li></ul><ul><li>Insurer has to prove that the loss was proximately caused not by the insured peril , but by the expected peril </li></ul>
    36. 36. Value of the doctrine <ul><li>This doctrine serves not only to define the scope of the coverage under the contract but serves also to protect the relative rights of the parties to the contract </li></ul><ul><ul><li>Maintains a balance between the rights of the insured and insurer </li></ul></ul><ul><ul><li>In absence of this rule, every loss could be claimed by the insured and every loss could be rejected by the insurer </li></ul></ul><ul><ul><li>Allows for the application of common sense to the interpretation of an insurance contract to th e mutual advantage of the parties </li></ul></ul>
    37. 37. Mitigation of Loss <ul><li>In the event of some mishap to the insured property , the assured must take all necessary steps or measures for the purpose of averting or minimizing a loss </li></ul><ul><li>If he does not do so , the insurer can avoid payment of loss attributable to assured negligence </li></ul><ul><li>In short , the assured is bound to do his best under the circumstances , but he is not bound to do so at the risk of his life </li></ul>
    38. 38. Commencement Of Policy <ul><li>As per Indian Contract Act , the party to whom offer has been made should accept it unconditionally and communicate his acceptance to the person making the offer </li></ul><ul><li>Acceptance must be signified by some act as agreed upon by the parties or from which the law raises a presumption of acceptance </li></ul><ul><li>Mere delay in giving an answer or silence cannot be construed as accpetance </li></ul><ul><li>When policy is of particular date – covers liability from the previous midnight preceding the same date </li></ul><ul><li>However special contract in policy or when time is mentioned in policy , it would prevail </li></ul>
    39. 39. Period of insurance <ul><li>Life Insurance </li></ul><ul><ul><li>Continuing contract with a condition that the premium is to be paid at regular interval </li></ul></ul><ul><ul><li>If premium is not paid regularly , the contract lapses </li></ul></ul><ul><ul><li>Can be revived subject to the fulfillment of certain conditions </li></ul></ul><ul><li>Fire insurance </li></ul><ul><ul><li>Contract of insurance is for a certain period </li></ul></ul><ul><ul><li>Contract automatically comes to an end after the expiry of the fixed period </li></ul></ul><ul><li>Marine insurance </li></ul><ul><ul><li>For particular period </li></ul></ul><ul><ul><li>For a particular voyage </li></ul></ul>
    40. 40. Re-Insurance <ul><li>When risk insured is beyond the capacity of insurer </li></ul><ul><li>Insurer may insure the same risk either wholly or partially with other insurers </li></ul><ul><li>Re-insurance can be resorted to in all kinds of insurance </li></ul><ul><li>A contract of re-insurance is also a contract of indemnity </li></ul>
    41. 41. Thank you!!!

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