The document summarizes 10 special features of insurance contracts: 1) Aleatory - Insurance contracts are aleatory in nature as the insured may receive substantially more in claims than premiums paid, depending on chance. 2) Adhesion - Insurance contracts are contracts of adhesion as the insurer writes the contracts and presents them to the insured on a "take it or leave it" basis. 3) Utmost good faith - Both parties must have faith in each other. The insured must disclose all material facts and the insurer must only avoid the contract if the insured intentionally misrepresents or conceals facts. 4) Executory - The insurer only performs its obligations if certain events like losses occur.

1. LIFEANDGENERAL INSURANCE
SPECIALFEATURESOFINSURANCECONTRACT
ANILKUMAR K.Y
DEPARTMENT OF COMMERCE, SIMS

2. SPECIAL FEATURES OF INSURANCE CONTRACT
1. Aleatory :
 if one party to a contract might receive considerably more in value than
he or she gives up under the terms of the agreement, the contract is said to
be aleatory.
 Insurance contracts are of this type because, depending upon chance or
any number of uncertain outcomes, the insured may receive substantially
more in claim proceeds than the amount was paid to the insurance
company in the form of premiums.
 On the other hand the insurer could ultimately receive significantly more
amount than the insured party if a claim never filed.

3. 2. Adhesion :
 In a contract of adhesion, one party draws up the contract and
presents it to the other party on a “take it or leave it “ basis;
 the receiving party does not have the option of negotiating revising
or deleting any part or provision of the document.
 Insurance contracts are of this type, because the insurer writes the
contracts and the insured either adheres to it or is denied coverage.

4. 3. Utmost good faith
According to this principle, both the parties (i.e. insured and insurer) should have
faith over each other.
 As a client it is the duty of the insured to disclose all the facts to the insurance
company, any fraud or misrepresentation of facts can result into cancellation
of the contract.
 The insured must disclose all the material facts known to him at the time the
contract is entered into, if the insured fails to disclose all the material facts
relating to the subject matter of insurance, the contract can be avoided by the
insurer

5. 4. Executory
 It is stated in the insurance and agreement that the insurer will only
perform its obligation after certain events takes place ( in other words,
losses occur)
5. Unilateral
insurance contracts are unilateral ; the insured performs the act of paying the
policy premium, and insurer promises to reimburse the insured for any
covered losses that may occur.
It must be noted that once the insured has paid the policy premium, nothing
else is required on his or her part; only insurer has responsible any further
action .
6. Personal contract:
Insurance contracts are usually personal agreements between the insurance
company and the insured, and are not transferable to another person
without the insurer’s consent.

6. 7. Warranties and representations
A warranty is a statement that is considered guaranteed to be true whereas
representation is a statement that is believed to be true to the best of the
other part’s knowledge.
According to the laws of most states and in circumstances the responses that a
person gives on an insurance application are considered to be a
representations, and not warranties.

7. 8. Misrepresentations and concealments
A misrepresentation is a statement, whether written or oral, that is false.
Whereas concealment, on the other hand, is the failure to disclose information
that one clearly knows about.
In order to void a contract, the insurance company must prove that the
applicant misrepresented information and willfully and intentionally
concealed information.

8. 9. Conditional
Insurance contracts are conditional, when a loss is suffered, certain conditions
must be met before the contract can be legally enforced. For example, the
insured must satisfy the condition of submitting to the insurance company
sufficient proof of loss or prove that he or she has an insurable interest in
the persons insured.
10. Fraud
Fraud is a intentional attempt to persuade, deceive or trick someone in an
effort to gain something of value. If an insurance applicant intentionally
lies in order to gain something then it is considered as fraud.
If an applicant misrepresentations some information with no intent for gain ,
then no fraud has occurred.

9. Insurance laws
Insurance laws is the practice of law surrounding insurance, including
insurance policies and claims. It can be broadly broken into three
categories :
 Regulation of the business of insurance
 Regulation of the content of insurance policies
 Regulation of claim handling
Insurance business is governed by a number of acts:
 The first statute in India to regulate the life insurance business was the
indian life assurance companies act,1912
 The insurance act of 1938 was the first legislation governing all forms of
insurance.
 Life insurance in india was completely nationalizes on jan 19 1956,
through the LIC act
 All 245 insurance companies operating in the country were merged into 1
entity, the life insurance corporation of india.

10.  The general insurance business act 1972 was enacted to nationalize the
about 100 general insurance companies.
 Untill 1999, there were no private insurance companies in india . The
government then introduced the IRDA act 1999 to allow private
companies.
 Foreign investment was also allowed and capped at 26% holding in the
Indian insurance companies.
 In 2015 the limit of FDI in insurance sector has been raised to 49%
subject to certain conditions
 A minimum capital of 400 crore is required to set up an insurance
business.

11. Thank you