General Principles of Law of Insurance.pptx
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The document provides an overview of general principles of insurance law, including: 1) It defines a contract of insurance and outlines essential elements like offer and acceptance, competence of parties, consideration, and utmost good faith. 2) It discusses key concepts like insurable interest, the risk insurable, and classification of insurance contracts and policies. 3) It covers important topics such as alteration of risks, assignment of insurance policies, and principles of indemnity, proximate cause, and subrogation that govern insurance contracts.
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General Principles of Law of Insurance.pptx
- 1. GENERAL PRINCIPLES OF LAW OF INSURANCE Mr. Vishal Ranaware © Vishal Ranaware
- 2. Content ■ Contract of Insurance - classification of contract of insurance; nature of various insurance contracts and parties thereto. ■ Principle of good faith, non-disclosure, and misrepresentation in insurance contracts. ■ Insurable Interest; the risk insurable. ■ Insurance policy, classification of policies, form and contents, conditions of policy. ■ Alteration of risks. ■ Assignment of the subject matter. © Vishal Ranaware
- 3. Contract of Insurance ■ Definition ■ Essential Elements – Section 10 of ICA 1872 – Contract between parties – Insurer undertakes to protect the insured from any loss – Consideration – Written contract i.e. insurance policy – Case: ■ Medical Defence Union Ltd vs Department of Trade (1979) 2 Ch D 421 ■ Prudential Insurance Co vs Inland Revenue Commissioner (1904) 2 KB 658 © Vishal Ranaware
- 4. Essential Elements ■ Offer & Acceptance – LIC vs Annamma (1999) 3 Ker.LT 142 – Esa Tony Phillip vs LIC (AIR 2009 NOC 785 NCC) ■ Competence of Parties to make contract – Great American Insurance Co vs Madan Lal Sonulal, ILR (1935) 59 Bom. 656 – Zafar Ahsan vs Zubaida Khatun, (1929) 27 All.L.J. 1114 ■ Free Consent – P. Sarojan vs LIC, AIR 1986 Ker. 201 – Orient Insurance Co. Ltd. vs Gouramma, AIR 1994 Kant. 29 © Vishal Ranaware
- 5. Conti… ■ Lawful Consideration – Prudential Insurance Co vs Inland Revenue Commissioner (1904) 2 KB 658 ■ Lawful Object ■ Utmost good faith (Uberrima fides) ■ Insurable Interest ■ Indemnity ■ Subrogation ■ Proximate cause © Vishal Ranaware
- 6. Classification of Contracts of Insurance ■ Insurance ■ Nature of the Interest Affected – Personal Insurance – Property Insurance – Liability Insurance ■ Nature of Event – Life Insurance – Fire Insurance – Marine Insurance – Miscellaneous Insurance © Vishal Ranaware
- 7. Conti… ■ Insurance ■ Voluntary/ Private Insurance – Personal Insurance ■ Life, Health, Accident – Property Insurance ■ Fire, Marine, Other general policies like, theft, burglary ■ Government/ Public Insurance – Old age disability health insurance, Retirement, Unemployment, Workers compensation, Crop Insurance © Vishal Ranaware
- 8. Cont… ■ Insurance ■ Life Insurance/ Personal Insurance ■ Property Insurance ■ Marine Insurance ■ Fire Insurance ■ Liability Insurance ■ Guarantee Insurance ■ Social Insurance © Vishal Ranaware
- 9. Nature of Insurance “यत ् भवतत तत ् नश्यतत” | “Yat Bhavati Tat Nasyati” “Whatever is created will be destroyed” ■ Insurance serves two-fold purpose ■ 1. Immediate – short ranged & proximate purpose Loss/risk/damage spread over large number of risk bearers and the immediate beneficiary is the insured. ■ 2. Far-sighted – long-range & remote purpose, where it accelerates economic growth of nation through investment by Insurance Companies the in development of commerce & industry of the nation. © Vishal Ranaware
- 10. Conti… ■ Contract of Aleatory ■ Contract of Utmost good faith – Caveat emptor – “Good faith’ – Rozanes vs Bowen (1928) – Marine Insurance Act, 1963 ■ Insurance is uberrimae fidei (Section 19) ■ Disclosure by assured (Section 20) ■ Disclosure by agent (Section 21) – Section 45 of Insurance Act, 1938 – 3 yrs time limit to question the validity of life insurance policy ■ LIC vs Asha Goel (2001) ■ United India Insurance Company Ltd. vs Harchand Rai Chandan Lal (2004) ■ Vikram Greentech (I) Ltd. vs New India Assurance Co. Ltd. (2009) © Vishal Ranaware
- 11. Conti… – Mackenzei vs Coulson (1869) – Scope of Duty Disclosure ■ LIC vs Sakunthalabai (1975) ■ Satwant Kumar Sandhu vs New India Assurance Co. Ltd. (2009) ■ Branch Manager LIC vs Nilkanta Mandal (2007) ■ Carter vs Boehm (1776) ■ Ratanlal vs Metropolitan Insurance Co (1959) ■ Lim vs Reid (1843) ■ Omprakash Moda vs Life Insurance Corporation of India (2006) – Effect of non-disclosure © Vishal Ranaware
- 12. Conti… ■ Contract of Indemnity – Section 124 of ICA 1872 – Dalby vs India & London Life Assurance Company (1884) 15 CB 365 – Theobald vs Rly Passengers Ass Co (1854) – Castellain vs Preston (1883) – Economic Transport Organisation vs Charan Spg. Mills (P) Ltd. (2010) – United India Insurance Co. Ltd. vs Kantika Colour Lab (2010) – Atchison vs Lohre (1879) – Godsall vs Boldero (1807) © Vishal Ranaware
- 13. Conti… ■ Contract of Wager – Salt vs Northampton (1892) – Wilson vs Jones (1867) – Carlill vs Carbolic Smoke Ball Company (1893) – Tyrie vs Fletcher (1777) – Lucena vs Craufurd (1806) © Vishal Ranaware
- 14. Conti… ■ Parties involved: Insurer & Insured/ assured ■ Premium ■ Risk ■ Types of Insurance contract: – Life – Fire – Marine – New varieties like, liability, third party insurance, etc. © Vishal Ranaware
- 15. Insurable Insurance ■ Evolution of concept of Insurable Insurance – Fender vs St John Mildmay (1938) ■ Requirements of valid insurance contract at early stage ■ Principle of Public policy – Beresford vs Royal Insurance Co. (1938) ■ English laws and Insurable Interest – Life Assurance Act 1774 – Gambling Act, 1845 – Marine Insurance Act, 1906 © Vishal Ranaware
- 16. Conti… ■ Definition of term ‘Insurable Interest’ – EW Patterson: A relation between the insured and the event insured against, such that the occurrence of the event will cause substantial loss or injury of some kind to the insured. – WH Rodda: Insurable Interest may be defined as an interest of such a nature that the occurrence of the event insured against would cause financial loss to the insured. – RM Ray – Lucena vs Craufurd (1806): Lawrence J defined insurable interest © Vishal Ranaware
- 17. Conti… ■ Nature of Insurable Interest – Lucena vs Craufurd (1806) ■ Time or Duration of Interest – Life Insurance: at the when the contract is formed – Fire Insurance: both at the commencement of policy & at the time of loss – Marine Insurance: at the time of loss © Vishal Ranaware
- 18. Conti… ■ Insurable Interest & Life Insurance – Blood Relationship ■ On Ones’s Own Life ■ By Husband or Wife – Griffiths vs Fleming (1909) – Married Women’s Property Act – Reed vs Royal Exchange Assurance Co. (1795) © Vishal Ranaware
- 19. Conti… ■ Parent & Child – Pecuniary interest – Illegitimate daughter – Stahl vs Grand Lodge, A.O. of U.W. [(1906) 98 S.W. 643] – Best vs House (Ky.) [113 S.W. 849] – Maxey vs Franklin Life Ins. Co. [164 S.V. 438] – Carpentor vs United States Life Insurance Co. (1894) – Overton vs Colored Knightd of Pythias (1915) – Aetna Life Insurance Co vs France (1876) – Manishankar vs Alliance & Stuttgarter Life Ins Co (1941) ■ Other Relations – actual dependence © Vishal Ranaware
- 20. Conti… – Contractual Relationship ■ Debtor & Creditor ■ Partner & Co-partner ■ Principal & Agent ■ Master & Servant – Hebdon vs West (1863) ■ Trustee vs Co-Trustee – DM, United India Insurance Company Ltd. vs Amarjeet Singh (2011) © Vishal Ranaware
- 21. Conti… ■ Insurable Interest & Fire Insurance – Ownership & Special interest – Interest of the Bailee ■ Vijay Kumar vs New Zealand Insurance Co (1954) – Interest of an Agent – Purchaser and Seller ■ Gnana Sundaram vs Vulcan Insurance Co Ltd (1931) ■ Sec 54 of Transfer of Property Act, 1882 ■ Sec 49 of Transfer of Property Act, 1882 © Vishal Ranaware
- 22. Conti… – Mortgagor & Mortgagee ■ North British & Mercantile Insurance Co vs London, Liverpool and Globe Insurance Co (1877) ■ Westminster Fire Office vs Glasgow Provident Investment Society (1888) ■ Sec 72 of TP Act – Lessor & Lessee ■ Castellain vs Preston ■ Trotter vs Watson (1869) – Tenant has insurable interest in furniture – Lien holder © Vishal Ranaware
- 23. Conti… ■ Insurable Interest & Marine Insurance – Wamock vs Davis – Sec 7-17 of Marine Insurance Act, 1963 – Tomlison (Haullers) Ltd vs Haplurane (1965) – Contship Container Lines Ltd. vs D.K. Lal (2010) – Suraj Mal Ram Niwas (P) Ltd. vs United India Insurance Co. Ltd. (2010) © Vishal Ranaware
- 24. The Risk Insurable ■ Meaning of Risk ■ Scope of Risk – The Xantho, Wilson Son’s and Co. v. Owners of Cargo Par the Xantho, (1887): Limit of liability of Insurer ■ Sources of Risk – Perils ■ Natural Perils ■ Man Made Perils – Theft – Riots, Strikes & Malicious Damage – Accidents ■ Economic Perils © Vishal Ranaware
- 25. Conti… – Hazards ■ Physical Hazard ■ Moral Hazard ■ Morale Hazard ■ Types of Risks – Pure Risk ■ Personal Risk ■ Property Risk ■ Liability Risk – Speculative Risk © Vishal Ranaware
- 26. Conti… ■ Time of Loss – New India Assurance Co Ltd. vs GN Sainonami (1997) – Hutchins Bros’ vs Royal Exchange Assurance (1912) – Maxwell vs Prince (1906) ■ Causa Proxima – Rule of proximate cause – In jure non remota causa, sed proxima, spectator – Hamilton, Fraser and Co vs Pandorf (1887) – Pink vs Fleming (1890) – Ionides vs Universal Marine Insurance Co (1863) – Leyland Shipping Co vs Norwich Union Fire Insurance Society Ltd. (1919) – Insitt vs Rly Passengers Assurance Co (1889) – Reynolds vs Accidental Insurance Co. – Cornish vs Accident Insurance (1889) – Fitton vs Accidental Death Ins Co (1864) – Wayne Tank & Pump Co vs Employer’s Liability Assurance Corporation (1974) © Vishal Ranaware
- 27. Conti… ■ Application of Rule in the Various Classes of Insurance – Life Insurance – Accident Insurance ■ Insitt vs Rly Passengers Assurance Co (1889) ■ Sandeep Kumar Chourasia vs Divisional Manager, New India Insurance Company Ltd. (2013) – Fire Insurance ■ Stanley vs Western Insurance Co (1968) ■ Marsden vs City & Country Fire Assurance Co (1861) – Marine Insurance ■ Leyland Shipping Co vs Norwich Union Fire Insurance Society Ltd. (1919) © Vishal Ranaware
- 28. Conti… ■ Risk & Duty of the Assured – Positive & Negative duty – Beresford vs Royal Assurance Co – Gray vs Barr (1971) – Currie & Co vs Bombay Native Insurance Co – Devlin vs Queen Insurance Co © Vishal Ranaware
- 29. Conti… ■ Elements of Risk – Life Insurance: ■ Habits or mode of living ■ Occupation ■ Environment ■ Position & status in life ■ Character ■ Heredity ■ Previous illness ■ Opportunities for exposure to special dangers © Vishal Ranaware
- 30. Conti… – Fire Insurance ■ Nature of the property ■ Character & constitution ■ Area ■ Situation & locality ■ Exposure to outside dangers ■ Inherent defects ■ Use & habits of the assured ■ Title of the property – Marine Insurance ■ Voyage and its nature ■ Route ■ Winds & storms in the locality ■ Danger of war, capture, & seizure ■ Pirates ■ Mutiny of the crew ■ Insurrection of native & dangerous coasts © Vishal Ranaware
- 31. Conti… ■ Alteration of Risk – Baxendale vs Harvey (1859) – Conditions prohibit alteration ■ Absolutely ■ Without prior notice ■ Without prior sanction ■ Increasing the risk – Pim vs Reid © Vishal Ranaware
- 32. Assignment of the Insurance Policy ■ What is Assignment? ■ Nature & manner of assignment ■ Insurance policies -> property ■ Privity of contract ■ Development in assignment laws ■ Gill vs Yorkshire Insurance Co (1913) ■ North of England Oil Cake Co vs Archangel Insurance Co (1875) © Vishal Ranaware
- 33. Conti… ■ Assignment of Life Insurance policies – Sec 130 of Transfer of Property Act – Repealed – DM Mudaliar vs II & B Corp (1957) – Mulraj Khataw vs Vishwanath Prabhuram Vaidya (1912) – Sec 38 of Insurance Act, 1938 – Conditions for Valid Assignment – Conditional assignment – Priority of claims – Bai Lakshmi vs Jaswantlal Tribhuvandas (1947) – Mithoolal vs Life Insurance Corporation of India (1962) © Vishal Ranaware
- 34. Conti… ■ Assignment of Fire Insurance policies – Sec 135 of Transfer of Property Act, 1882 – Rayner vs Preston (1881) – Sec 54 of Transfer of Property Act, 1882 – Sec 49 of Transfer of Property Act, 1882 – Krishna Food & Baking Industry (P) Ltd. vs New India Assurance Co. Ltd. (2008) © Vishal Ranaware
- 35. Conti… ■ Assignment of Marine Insurance policies – Sec 135 of Transfer of Property Act, 1882 – original provision – Sec 130A & 135A of of Transfer of Property Act, 1882 – Repealed – Sec 52 & 53 of Marine Insurance Act, 1963 – Sec 6(e) of Transfer of Property Act, 1882 ■ Assignment of Fire & Marine Insurance policies comparision – Consent of insurer – When it can be assigned – before or after loss? © Vishal Ranaware
- 36. Q & A ■ Thank You! © Vishal Ranaware