Law of insurance


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Law of insurance

  1. 1. LAW OF INSURANCE CONTRACT OF INSURANCE Insurer & Insured Premium Policy Subject matter of insurance &insurable interest Perils insured against Various kinds of insurance—Life, Fire, marine, personal accident Nature of contract of insurance
  2. 2. Fundamental elements of Insurance <ul><li>1) Utmost good faith </li></ul><ul><li>2) Indemnity </li></ul><ul><li>3) Insurable interest </li></ul><ul><li>4) Causa proxima </li></ul><ul><li>5) Risk must attach </li></ul><ul><li>6) Mitigation of loss </li></ul><ul><li>7) Contribution </li></ul><ul><li>8) Subrogation </li></ul><ul><li>9) Period of insurance </li></ul><ul><li>Premium </li></ul><ul><li>Return of premium </li></ul><ul><li>Reinsurance & double insurance </li></ul>
  3. 3. LIFE INSURANCE <ul><li>The contracts of life insurance in India are governed by the </li></ul><ul><li>Insurance Act,1938 & the Life insurance Corporation Act, 1956. </li></ul><ul><li>The life insurance business in India was nationalized on 19.01.1956 </li></ul><ul><li>LIFE INSURANCE CONTRACT </li></ul><ul><li>Insurance & Assurance --- Distinction </li></ul><ul><li>Certainty of event </li></ul><ul><li>Indemnity </li></ul><ul><li>Valuation of insurable interest </li></ul><ul><li>Time of insurable interest </li></ul><ul><li>Duration of contract of insurance </li></ul>
  4. 4. Insurable Interest <ul><li>The assured must have insurable interest in the life insured, otherwise the contract of insurance is void. (Should be there at the time of the contract of insurance) </li></ul><ul><li>Following persons are held to have insurable interest </li></ul><ul><li>1 In the life of a relative by whom he is supported </li></ul><ul><li>2 A creditor has insurable interest in the lie of his debtor upto the amount of the debt at the time of the issue of policy </li></ul><ul><li>3 Servant has insurable interest in the life of his employer to the extent of salary for the term of service </li></ul><ul><li>4 Partner has insurable interest in the life of other partners </li></ul><ul><li>Right of insurer to avoid Life policy– Contract of life insurance like other contracts of insurance, is a contract of uberrimae fidei </li></ul><ul><li>(exception to the above) </li></ul>
  5. 5. TYPES OF POLICIES <ul><li>1 Endowment Policy </li></ul><ul><li>Children’s endowment Policy </li></ul><ul><li>2 Whole - Life Policy </li></ul><ul><li>3 Limited – payment Life Policy </li></ul><ul><li>4 Joint Life Policy </li></ul><ul><li>5 Convertible whole life Policy </li></ul><ul><li>6 Anticipated Policy </li></ul><ul><li>7 Annuity Policy </li></ul><ul><li>8 Sinking Fund Policy </li></ul><ul><li>9 Junta Policy </li></ul><ul><li>SURRENDER VALUE </li></ul><ul><li>LOAN ON POLICIES </li></ul><ul><li>PROOF OF AGE & DEATH </li></ul><ul><li>SUICIDE </li></ul><ul><li>ASSIGNMENT & NOMINATION </li></ul>
  6. 6. FIRE INSURANCE <ul><li>The law relating to fire insurance in India is contained in the Insurance Act, 1938 & The General Insurance Business Nationalization Act, 1972. </li></ul><ul><li>Contract of Fire Insurance </li></ul><ul><li>Characteristics of a Fire Insurance Contract </li></ul><ul><li>-- It is a contract of Indemnity </li></ul><ul><li>-- It is a contract of uberrimae fidei </li></ul><ul><li>-- The assured must have insurable interest in the subject matter & it must be capable of valuation in terms of money </li></ul><ul><li>-- The risk covered is the loss resulting from fire or some cause which is the proximate cause of the loss </li></ul><ul><li>-- It is subject to the principles of subrogation & contribution </li></ul><ul><li>-- It is a contract from year to year </li></ul>
  7. 7. AVERAGE CLAUSE IN A FIRE POLICY---such proportion of actual loss as the sum insured bears to the total value of the property <ul><li>Insurable Interest (At the time of the contract & at the time of loss) </li></ul><ul><li>FIRE & LOSS by FIRE--Following losses are caused proximately by fire </li></ul><ul><li>-- necessary consequence .If there had been fire, it would not have happened </li></ul><ul><li>-- reasonable consequence .Results in the ordinary course of events from the happening of fire </li></ul><ul><li>-- Loss caused by water used to extinguish fire destroying property </li></ul><ul><li>-- Loss arising as a consequence of removal of the property from the building or loss due to theft during the confusion caused by the fire </li></ul><ul><li>Rights of Insurer </li></ul><ul><li>Right of avoiding the contract for non-disclosure of material fact </li></ul><ul><li>Right of control over the property </li></ul><ul><li>Right of entering the property </li></ul><ul><li>Right of subrogation </li></ul><ul><li>Right to salvage </li></ul><ul><li>Right of reinstatement & Right of contribution </li></ul>
  8. 8. Types of Fire Policy <ul><li>Specific policy—Upto a specific amount less than the real value </li></ul><ul><li>Comprehensive Policy—All in one Policy </li></ul><ul><li>Valued Policy—not a contract of indemnity </li></ul><ul><li>Floating Policy – property at different places </li></ul><ul><li>Replacement or Reinstatement Policy </li></ul>
  9. 9. MARINE INSURANCE <ul><li>The law relating to it is codified in the Marine Insurance Act, 1963 </li></ul><ul><li>CONTRACT OF MARINE INSURANCE </li></ul><ul><li>Marine Adventure </li></ul><ul><li>Maritime Perils </li></ul><ul><li>Insurable Interest–At the time of the loss </li></ul><ul><li>Lost or not Lost </li></ul><ul><li>Insurable value – ship </li></ul><ul><li>freight </li></ul><ul><li>goods </li></ul><ul><li>Any other subject matter </li></ul><ul><li>Disclosure & Representations </li></ul>
  10. 10. Marine Policy <ul><li>TYPES OF MARINE POLICIES: </li></ul><ul><li>1 Voyage Policy—at & from one place to another </li></ul><ul><li>2 Time Policy-- </li></ul><ul><li>3 Mixed Policy– combination of time & voyage policy </li></ul><ul><li>4 Valued Policy—specifies the agreed value of the subject matter </li></ul><ul><li>5 Open or unvalued policy—The value to be subsequently ascertained </li></ul><ul><li>6 Floating Policy– only the amount. Other details are subsequently </li></ul><ul><li>7 Wagering policy—void as assured has no insurable interest. Insurer meets his obligation out of consideration of honor. </li></ul>