Pooling of resources capable of being
distributed in times of calamities such as
fire, floods, epidemics and famine etc.
It is the act of providing against a possible
loss, by entering into a contract with one
who is willing to give assurance, that is, to
bind himself to make good such loss,
should it occur.
the instrument by which the contract is
Assurance in contract means “making
secure”, insure. It means the act of
assuring, a declaration tending to inspire
ASSURANCE AND INSURANCE
There is a tendency to use “Assurance” for
contracts of “life insurance” and
for risks upon property.
An assurance represents the principle and
insurance the practice.
any ships, goods or other movable which
are exposed to maritime perils.
IMPORTANT ELEMENTS IN INSURANCE
1. Subject matter of insurance
2. The peril or risk
3. The likely financial loss
the unforeseen element which may
one’s progress in achieving the objective.
1. Insured. Party effecting insurance
(individual, company, firm or corporate
2. Insurer. Party granting the protection
under an insurance policy.
3. Policy. It is the evidence of contract.
the compensation for loss or injury
sustained or to make good the loss or
UTMOST GOOD FAITH
Since insurance shifts risk from one party
to another, it is essential that there must
be utmost good faith and mutual
confidence between the insured and the
an assurance by the assured that he will not
do some particular thing or will fulfil any
condition that are decided in advance.
transfer of rights and liabilities of an
insured to another person who had
acquired insurable interest in the property
A person who is so interested in a a
as to have benefit from its existence and
prejudice by its destruction is said to have
insurable interest in the property. Such a
person can insure the property against fire.
Usual Types of General Insurance
It is an agreement whereby the insurer
undertakes to indemnify the assured, in the
manner and to the extent thereby agreed,
against marine losses, that is to say, the
losses incidental to marine adventure.
A large proportion of marine insurances
is made at the risk of individuals called
1. Hull Insurance. The loss associated with
the floating crafter.
2. Cargo Insurance. Loss or damage to
goods during transit by rail, road, sea or
Marine insurance covers the loss or
damage of ships, cargo, terminals and
any transport or property by which cargo
is transferred acquired or held between
the points or origin and final destination.
includes every description of vessel used in
the perils consequent on, or incidental to,
the navigation of the seas that is to say,
perils of the sea, fire, war perils, pirates,
rovers, thieves, captures, seizures,
restraints and detainments of princes and
Almost all policies are agreed value policies.
The insured and the insurer agree that the
sum insured is the value of the property
insured so that the agreed amount is
payable in case of total loss.
Mixed Sea and Land Risks
A contract of marine insurance may, by
its express terms, or by usage of trade,
be extended so as to protect the assured
against losses on inland waters or on any
land risk which may be incidental to any
FIRE INSURANCE BUSINESS
A contract of insurance by which the insurer
agrees for consideration to indemnify the
assured upto a certain extent and subject to
certain terms and conditions against loss or
damage by fire, which may happen to the
property of the assured during a specific
FIRE INSURANCE CONTRACT
Principle Object. Insurance against the loss
or damage occasioned by fire.
Insurer’s Liability. Limited by the sum
assured and not necessarily by the extent of
loss/damage sustained by the insured.
Insures. Has no interest in the safety or destruction
of the insured property apart from the liability
undertaken under the contract.
RISKS COVERED UNDER FIRE
Riots, strikes, malicious and terrorism
5. Storm, cyclone, typhoon, tempest,
hurricane, tornado, flood and inundation
6. Impact damage
7. Subsidence and landslide including
8. Bursting and/or overflowing of water
tanks apparatus and pipes
9. Missile testing operations
10. Bus fire
RISKS NOT COVERED BY FIRE
1. Theft during or after the occurance of
any insured risk
2. War or nuclear peril
3. Electrical break downs
4. Ordered burning by a public authority
Sub terranean fire
Fire policies have to be assigned with the
consent of the insures.
Marine cargo policies can be freely assigned
without the consent of the insurer, the logic
being that the ultimate buyer is usually not
known at the time of taking the cover.
If the vehicle is a total loss, the sum insured or the
value of the vehicle, whichever is less is paid.
If the vehicle is damaged, the cost of repair is paid.
If the parts are replaced, the cost of new parts will
be subjected to the depreciation.
In all cases, the age and general maintenance of
the vehicle is considered.
The losses against which a merchant or ship
owner is not protected by insurance.
Acts of own government
Breaches of the revenue laws
Breaches of the law of nations
Consequences of deviation
All losses arising from unseaworthiness
All loss arising from unusual protraction of the
g) All loss to which the ship owner is liable when
his vessel does damage to others