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    Insurance

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    Deepansh Goyal
    The document outlines several key features and principles of insurance law: 1. Insurance spreads risk across many individuals by pooling risks together, though it does not eliminate losses from uncertain events. 2. An insurance contract involves an agreement between an insurer and insured for a premium, with the policy as evidence of the contract. 3. The insured must have an insurable interest in the subject matter insured to distinguish it from a wagering agreement. 4. The insured can only recover losses proximately caused by insured risks, not remote causes, and must take reasonable steps to mitigate losses.

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    © All Rights Reserved
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    Insurance

    Uploaded by

    Deepansh Goyal
    27 views25 pages
    The document outlines several key features and principles of insurance law: 1. Insurance spreads risk across many individuals by pooling risks together, though it does not eliminate losses from uncertain events. 2. An insurance contract involves an agreement between an insurer and insured for a premium, with the policy as evidence of the contract. 3. The insured must have an insurable interest in the subject matter insured to distinguish it from a wagering agreement. 4. The insured can only recover losses proximately caused by insured risks, not remote causes, and must take reasonable steps to mitigate losses.

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    6. Insurance

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    The document outlines several key features and principles of insurance law: 1. Insurance spreads risk across many individuals by pooling risks together, though it does not eliminate losses from uncertain events. 2. An insurance contract involves an agreement between an insurer and insured for a premium, with the policy as evidence of the contract. 3. The insured must have an insurable interest in the subject matter insured to distinguish it from a wagering agreement. 4. The insured can only recover losses proximately caused by insured risks, not remote causes, and must take reasonable steps to mitigate losses.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    27 views25 pages

    Insurance

    Uploaded by

    Deepansh Goyal
    The document outlines several key features and principles of insurance law: 1. Insurance spreads risk across many individuals by pooling risks together, though it does not eliminate losses from uncertain events. 2. An insurance contract involves an agreement between an insurer and insured for a premium, with the policy as evidence of the contract. 3. The insured must have an insurable interest in the subject matter insured to distinguish it from a wagering agreement. 4. The insured can only recover losses proximately caused by insured risks, not remote causes, and must take reasonable steps to mitigate losses.

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    of 25

    LAW OF

    INSURANCE
    FEATURES

    • Main principle of Insurance is the pooling


    of risks. It spreads the loss over a large
    number of people who insure themselves
    against the risk….
    FEATURES

    • Insurance does not avert or eliminate loss arising from uncertain events.
    FEATURES
    • It is a co operative device to spread the loss caused by a risk over a large
    number of persons who are also exposed to the same risk and insure
    themselves against that risk.
    INSURANCE INVOLVES:

    · Contract of Insurance is between the Insurer & Insured for a


    consideration called premium.
    INSURANCE INVOLVES:

    · The instrument in which the contract of insurance is generally embodied


    is called the policy. It is the evidence of the contract.
    INSURANCE INVOLVES:

    · The thing insured is called the subject matter & the interest of the
    insured in the subject matter is called insurable interest.
    INSURANCE INVOLVES:

    · The uncertain events or casualties are called perils insured against.


    IS INSURANCE A WAGERING
    AGREEMENT?
    • A contract of Insurance bears a superficial resemblance to a wagering
    agreement. The difference being that the object of Insurance is to
    protect the assured against losses whereas the object of wagering
    agreement is to earn speculative gain.
    FUNDAMENTAL ELEMENTS
    · The Principle of Utmost Good Faith. (UBERRIMAE FIDEI): The rule
    caveat emptor, i.e. let the buyer beware, does not apply. The assured
    being in the vantage point, since he knows the subject matter, he cannot
    SUPPRESSIO VERI, i.e. suppress facts or SUGGESTIO FALSI, i.e. make false
    suggestions or statements.
    • Indemnity: The assured, in case of a loss, shall be paid the actual
    amount of loss not exceeding the amount of the policy. The object of
    every contract of insurance is to place the assured in the same financial
    position, as nearly as possible, after the loss as if the loss had not taken
    place at all.
    • NOTE : Life insurance is not a contract of indemnity
    • Insurable Interest: The assured must be in a legally recognised relationship to what is insured so that he will suffer a
    direct financial loss on the happening of the event insured. This point distinguishes it from a wagering agreement.
    • While one cannot define an insurable interest with complete certainty or precision, in general it exists when the
    policy holder ‘is so circumstanced with respect to the subject matter of the policy as to have benefit from its
    existence or prejudice from its destruction.’
    • Note:
    1. An owner of a movable property has an insurable interest in the property.
    2. A bailee, hirer, leasee, or mortgagor would also have an insurable interest.
    3. In life insurance contracts, blood relatives and relatives by marriage have insurable interest.
    4. An Employer also has an insurable interest in the employee and a creditor in the life of the debtor.
    • The insurable interest doctrine asks the following questions:
    1. What is the policyholder’s stake in the subject of the property?
    2. How attenuated (fine or small) is that interest to the probable cause
    and effect of loss?
    3. How strong is that interest?
    4. What is the reasonable range of value for the interest? And
    5. Would permitting the policyholder to recover encourage wagering,
    fraud, moral hazard, or some other evil?
    • CAUSA PROXIMA NON REMOTA SPECTATUR: The assured can recover the loss
    only if it is proximately caused by any of the perils insured against. If the loss is
    due to remote causes, the assured will not be indemnified.
    • The question, which is the causa proxima of a loss, arises only when there is a
    succession of causes.
    • Proximate cause is the dominant cause - it does not have to be the first.
    • Proximate does not mean nearest in time but that which is proximate in
    efficiency.
    PROXIMATE CAUSE
    • Doctrine based on cause and effect
    • PROXIMATE CAUSE
    • Direct
    • Most dominant
    • Most effective
    • Closely connected to loss in efficiency and effectiveness
    • Common sense
    • Mitigation of loss: The assured must take all necessary steps or
    measures as may be reasonable for the purpose of averting or
    minimising a loss.
    • The risk must attach: The insurer receives the premium in a contract of
    insurance for running a certain risk. If for any reason the risk is not run,
    the consideration for which the premium was given fails. In such an
    event the insurer must return the premium.
    • Contribution: The right of contribution arises when the subject matter is
    insured with two or more insurers against the same peril. Either, one
    insurer meets the loss and claims it from the others or they meet the loss
    proportionately.
    • Subrogation: This applies to fire & marine policy i.e. the insurer, after
    making good the loss, is entitled to be put into the place of the assured.
    That is to say, the insurer steps into the shoes of the assured when he
    has paid the amount of the policy to the assured & is entitled to all the
    rights & remedies that the assured would have had against third persons
    regarding the loss.
    • National Employers Mutual General Insurance Association Limited Vs. Jones (1987)
    • A car belonging to Ms. Hopkins was stolen. The insurance company paid for the car. The car became
    the property of the company and it could recover its price from the person who had bought the car in
    good faith.

    • Holmes Vs. Payne (1930)


    • For a lost necklace, the insurer agreed that the insured could buy jewellery worth £ 600. After the
    insured had bought jewellery worth £ 264, the necklace was found. The insurer had become the
    owner of the necklace and was bound to let the insured buy jewellery for the remaining amount.
    • The period of Insurance Fire insurance is from year to year, marine
    insurance is from year to year or voyage to voyage. Life insurance is a
    continuing contract if premium is paid.
    SOME POINTS
    • An Insurer can reinsure the risk with other insurers. This is termed as
    reinsurance.
    • In Life Insurance, there are three cases in which insurable interest is
    presumed; own life, life of a spouse, life of a child. In all other cases,
    insurable interest has to be proved.
    • All LIC policies contain a clause that if the assured commits suicide within
    one year of the policy being taken, the risk does not attach.
    • A Life Insurance Policy can be surrendered before the completion of the
    period of insurance. A life insurance policy can be assigned Also, based
    on the surrender value of the policy, the insurer can avail a loan from LIC
    or from banks by assigning the policy to them. Nomination facilities are
    also available on life insurance policies.
    • Fire Insurance policy contains an average clause.
    Cover Note
    • It is a document issued by an insurer or underwriter on receiving a proposal pending
    the execution of the policy.
    • It covers the risk between the date of the contract of insurance and actual issue of the
    policy of insurance.
    • It cannot be regarded in law as either an insurance policy or agreement to issue an
    insurance policy.
    • But it has been held that if the cover note is properly stamped, a suit for specific
    performance of the contract can be founded thereon.
    • The liability of the insurer under the cover note ceases when he intimates to the
    assured the rejection of the proposal.
    THANK
    YOU FOR
    LISTENING

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