The document discusses the key principles of a valid insurance contract. It states that an insurance contract requires elements like agreement, consideration, and legal capacity. It also outlines several special principles of insurance contracts, including insurable interest, utmost good faith, indemnity, subrogation, warranties, proximate cause, assignment, and return of premium. These principles govern issues like what can be insured, disclosure obligations, paying claims, recovery from third parties, important policy conditions, determining direct causes of loss, and returning premiums.

1. Insurance Contract

2.  A valid contract must have the following
essentials
 Agreement (offer and Acceptance)
 Legal Consideration
 Competent to make contract
 Free consent
 Legal object

3. Insurance may be defined as a contract between two
parties .
The special contract of insurance involves principles
 Insurable Interest
 Utmost good faith
 Indemnity
 Subrogation
 Warranties
 Proximate cause
 Assignment
 Nomination
 Return of premium

4.  Insurable Interest: For an insurance contract to be
valid , the insured must possess an insurable
interest in the subject matter of insurance.
 Utmost good faith: The doctrine of disclosing all
material facts embodied is the principle of utmost
good faith.
 Principles of indemnity: According to this principle
the insurer undertakes to put the insured , in the
event of loss. In the same position that he occupied
immediately before the happening of the event
insured against.

5.  Doctrine of Subrogation: Refers to the right of the
insurer to stand in the place of the insured. After
settlement of the claim, in so far as the insured’s right to
recovery from an alternative source is involved. If the
insured is in a position to recover the loss in full or in part
from a third party due to whose negligence the loss may
have been precipitated , his right to recovery is
subrogated .
 Warranties: Certain conditions and promises in the
insurance contract which are called warranties.
Warranties may be expressed or implied. Warranty is
very important conditions which are to be fulfilled by the
insured. On the breach of warranty the insurer becomes
free of liability.

6.  Proximate cause: The rule is that the immediate and
not the remote cause is to be regarded. The maxim
is that see the proximate cause , not the distant
cause. If the real cause of the loss is insured , the
insurer is liable to compensate the loss, otherwise
the insurer may not be responsible for loss.
 Return Of Premium: Ordinarily the premium once
paid cannot be returned. But in the following cases
the refund is allowed
 By agreement in the policy

7.  For reasons of equity: