essay on insurance contract
The seller recovered ?? ©2021 Essay Sauce / Terms of use / Content policy / Privacy policy. Where there are two or more insurances on one risk, the principle of contribution applies between insurers. Concealment of any fact will entitle the insurer to deprive the assured of benefits of the contract. Similar rules apply to employers’ liability insurance. In the event of loss, the fixed amount is payable irrespective of the actual amount of loss. A fire insurance is an agreement between the two parties, i.e., insurer and insured, whereby the insurer undertakes to indemnify the loss suffered by the insured in consideration for his (insured) paying of certain sum called premium. (iv) A servant engaged for a term of years has insurable interest in the life of his employer. The cause which is truly proximate is that which is proximate in efficiency. In certain cases fire can’ cause the loss of business of the insured. Essays, Research Papers and Articles on Business Management, Notes on Insurance: Meaning, Need and Functions, Risk in Insurance: Meaning, Types and Its Transfer, Advantages and Disadvantages of Franchising. As such, it has resulted in vast amounts of litigation. All insurance contracts are based on the concept of uberrima fides, or the doctrine of utmost good faith. In case of ‘Hull Policy’, the amount insured is fixed at a level rather above the current market value and in case of ‘Cargo Policy’, the amount insured also includes an amount for certain charges and profit. Contrary to this, in case of ‘without profit’ policies, such a question does not arise. Facts which need NOT be disclosed by the Insured or Insurer: ‘ Facts of law ‘ Facts which the Insurer should know (e.g. Re-Insurance: Every insurer has a limit to the risk that he can undertake. Insurance contract law Introduction The stringency of the doctrine of utmost good faith in English insurance law, though well known has nevertheless attracted a great deal of ... Get Full Essay. The contract of fire insurance is a contract of indemnity. If this option is not exercised, the policy continues as a whole life policy with premiums ceasing at a certain age. However, the aggrieved party in a breach of duty of utmost good faith may: ‘ Repudiate the contract entirely; ‘ Sue for damages if concealment is involved ‘ Waive his right to any or all these measures and allow the contract to carry on unhindered. A false statement, if it is to affect the validity of the agreement must; ‘ be one of fact ‘ be made by a party to the contract ‘ be material ‘ induce the contract ‘ cause loss or disadvantage to the insurer relying on it An insurer may avoid a policy on grounds of innocent, fraudulent or negligent misrepresentation. Differences between Fire Insurance and Marine Insurance: When the same subject-matter is insured with two or more insurers and the total sum insured exceeds the value of the subject-matter, the assured is said to be over-insured by double insurance. Insurance has been helpful in solving these problems of business and private life. The specific policy provides for the payment of a specific sum in respect of loss to the property and does not penalise under-insurance. The traditional claims for failing to find coverage have been supplemented by claims to the failure to find adequate coverage, misrepresentation of risks, delays in processing and for placing transactions with insurance companies who subsequently became … You can view our terms of use here. THE INSURER The duty of good faith has resulted in the following general duties for the insurer: Generally, an insurer must not misrepresent facts about the policy (or any other facts) that are material to the policy. The aspects of Misrepresentation in contract law Misrepresentation is a false statement of fact and law, which induces the represented to enter a contract. The value of the policy undertaken is fixed at the time of contract. There is always a fear of sudden loss. It covers all marine losses, that is to say, the losses incidental to marine adventure. You don't want to pay for the insurance and then find out that what you thought was In fire insurance, the assured must have insurable interest in the subject-matter of the insurance. * This essay may have been previously published on Essay.uk.com at an earlier date. The modes of discharge by the insurer are alternative. ...(download the rest of the essay above). The loss of life cannot be compensated and only a specified sum of money is paid. Essay # 2. In case of Fire Insurance, insurable interest must be present both at the time of insurance and at the time of loss. Under no circumstances, the insured is allowed to make profit out of the marine insurance contract. protection of the insured. These policies are taken out to make provision for the dependants. The vector a = («i, a2) completely describes the insurance contract. This is expresses by saying it is a contract of utmost good faith’ Material facts must be disclosed by the insured to the in insurer. A level premium (constant rate) is charged throughout the term. Contracts, Essay, Insurance, Insurance Management, Management. There are also examples of contract law cases and some free law essay examples. The sum assured under a Joint Life Policy (on two or more lives) is payable at the end of the endowment term or on the first death of any one the lives assured, whichever is earlier. 3. 2 lakh with three insurers as—with A for Rs.90,000, with B for Rs. Errors and Omissions insurance policies often cover both court costs and any settlements up to the amount specified on the insurance contract[12]. That means that the assured in the case of loss against which the policy has been made shall be fully compensated and never more than the value of the policy. Customers must disclose all facts which … Normally, the fire insurance policy is for a period of one year after which it is to be renewed from time to time. How to Effect Life Insurance (I.E., Procedure)? A broker has no duty of good faith to the insurer on its own account – it only owes that duty to the insurer as agent of the insured. This is the objective element. Such examination can be conducted only by a doctor approved by the insurance company. It may or may not present at the time of insurance. As such, the actions of the broker will be seen as the actions of the insured. Before uploading and sharing your knowledge on this site, please read the following pages: 1. (iii) Agent has an insurable interest in the property of his principal. However, it becomes difficult to determine indemnity when the loss occurs. All the Questions i here currently do not have answers mentioned but they’ll be added in the near future. Insurance provides security against such losses. You can view our. Standard features of an insurance contract include the offer and the acceptance, consideration, legal capacity and purpose, and indemnification. The person who gets his life/property insured is called Insured/Assured. Proximate does not mean the nearest in time. This means a broker’s actions may effectively result in the insured breaching its duty of good faith. This policy may be taken out for the protection of lives of all employees in a business concern. In case of Marine Insurance, insurable interest must be present at the time of loss. In case of loss, he may claim payment from the insurers in such order as he may think fit, but he will not get more than his actual loss, because a contract of insurance is a contract of indemnity. A person is said to have an insurable interest in the subject-matter (property or life) if he is benefitted by its existence and is prejudiced by its destruction. If the utmost good faith is not observed by either party the contract may be avoided by the other. For the safety of goods, insurance policy is taken. This policy is very useful to those persons who desire to provide a regular income for themselves and their dependants after the expiry of a specified period. Marine Insurance Contract is a Contract of Good Faith: The contract of marine insurance is a contract of uberrima fides, i.e., utmost good faith. This means that the insurer is unlikely to bring an action for the breach of good faith – rather, the insurer will merely cancel the contract for non-disclosure or deny a fraudulent claim. In many ancient societies, merchants and traders pledged their ships or cargo as security for loans. for students : all the ingredients of a good essay, Home » Law essays » Insurance contracts. He is under a duty to disclose accurately all factual information known to him. Every insurance policy is a contract between the policyholder and the insurer. 600 in damages from the estate agent, which was the difference between to two offers. The duty of disclosure at the time of renewal depends on the type of contract. offer, acceptance, and consideration will not guarantee a legally enforceable contract”. Yes! These Law essays have been submitted to us by students in order to help you with your studies. Also, the insurer must bring to the insured’s attention any unusual terms of the policy usually known as exceptions. For other businesses, disclosure is revived. These days large variety of policies have been designed for different purposes. Insurance Contract Law Issues Paper 2 Warranties November 2006 This paper should not be quoted as representing the fixed policy of either Commission. Therefore in this essay, the four core elements needed for the … Unvalued policies’ are rarely issued. ‘ Warranties A warranty is a promise by the insured relating to acts or to something which they agree to do or not to. Utmost good faith (Uberrimae fidei) is complete and total honesty; all statements must be true and all material facts must be revealed otherwise insurance could not avoided. When the policy is ready, it is sent to the assured by registered post. When a result has been brought about by two or more causes, you must, in insurance law, look to the nearest cause, although the result would, no doubt, not have happened without the remote cause. The summary of the doctrine was given in Rozannes v Bowen (1928), ‘As the underwriter knows nothing and the man who comes to him to ask to insure knows everything, it is the duty of the assured, to make a full disclosure to the underwriter without being asked of the material circumstances. COMPONENTS OF UTMOST GOOD FAITH Utmost good faith is usually divided into three components: representations, non disclosures and warranties. This contract does not help in controlling or preventing fire but it is a promise to compensate the loss. THE INSURED The duty of utmost good faith is a reciprocal duty which rests on both insured and insurer but in practice breaches by an insured are common. Generally, the cargo owner takes the Voyage Policy for each separate shipment of goods. If the loss is the result of such an efficient cause, it will be regarded as having been caused by the proximate cause. Download the full version above. Insurance contracts are a special class of contracts which are guided by certain basic principles like those of utmost good faith, insurable interest, proximate cause, indemnity, subrogation and contribution. The insurer should also disclose the facts of the policy to the proposer. If utmost good faith is not observed by either party, the contract may be avoided by the other party. The shipping company will not be entitled to get freight, if the goods are lost in transit. On the payment of premium the policy comes into operation and the risk is covered then onwards. The loss of life cannot be compensated and only a specified sum of money is paid. It is one of the oldest forms of insurance. The fire insurance policies are of the following kinds: It is a policy in which the amount payable in case of loss is fixed at the time when the policy is taken. The duty of good faith therefore requires the following from the insurer: 1. to manage, administer and process claims efficiently and without undue delay; 2. to decline claims only with reasonable evidence or belief that the claim should be declined; 3. to investigate the claim before declining a claim; Any insurance (compulsory or not) can be avoided for breach of good faith for breach of good faith i.e. All of our essays are donated in exchange for a free plagiarism scan on one of our partner sites. The agent’s duty of good faith to the principal requires full disclosure, not just of matters that relate to a possible conflict of interest, but of any information acquired in the course of the agent’s duties that might affect the principal’s position. It does not apply to life and personal accident insurance. The agent must not allow his own personal interest to conflict with those of his principal. Unemployment, health accident and old age insurances. Under annuity policy, the amount is payable by the insurer not in lump sum but by monthly, quarterly, half-yearly or annual installments which are paid either until death or for a specified number of years. Available from:
[Accessed 12-03-21]. The assured can, in the event of loss recover the actual amount of loss from the insurer. 4. Before taking a life insurance policy, it is important to take proposal for which is available free from the office of Life Insurance Corporation. This policy covers the loss arising out of water leakage from sprinkles which are set up to extinguish fire. The policy is in the form of an agreement between the insurance company and the assured to pay a certain sum of money to the assured on the happening of the event mentioned in the policy. Example of US bad faith which may result in emotional distress damages is an insurer offering to settle claims for an amount less than that the amount of the claim with no reason other than the insurer knows that the insured desperately needs the money and is unable to wait for trial to contest the amount. This essay will give you an overview of contract law, contract law cases and how contract law is used today. The analysis of this research will be limited to and focus on the insurance plans and health insurance systems in the US. That is why the amount payable in life insurance on the happening of the even is fixed in advance. Age limitations for health plan set-up. , mainly on the grounds that is weighted unfairly against the proposer. The warranty becomes part of the insurance contract. They have also been modified by principles of contract and by statutes as in the case of the Marine Insurance Act, 1963 which has to a certain extent relaxed the basic principles of insurance law. If the original policy for any reason comes to end or is avoided, the policy of reinsurance also comes to an end. The shipping company may insure the freight to be received which is called ‘Freight Insurance’. A contract of marine insurance is an agreement whereby the insurer undertakes to indemnify the insured in the manner and to the extent thereby agreed, against marine losses. The meaning of home (Borders by Thomas King and ‘Squatter’ by Rohinton Mistry), Positive and negative effects of watching television. In nutshell, he is bound to do his best under the circumstances, but he is not bound to do at the risk of his life. That is, it is the C.I.F. The following three things are covered in the subject-matter of marine insurance: The goods to be sent through ship is called ‘Cargo’. The insurer may ask the insured about circumstances which A. are known to the insurer; B. is what a reasonable person in the circumstances would know is a matter relevant to the risk; and C. is something which the insurer would not be expected to specifically ask about. Insurance Law is a Developing Area. For liability Insurance contracts, the insurer undertakes to indemnify the insured in case of liability to a third party, thus the insurance contract is taken for the benefit of the third party. In this policy, the coverage is allowed for a particular time and for a particular voyage or a definite route. A contract of insurance, therefore, is not a contract of indemnity. Although a party must not make any false statement, he is not bound to disclose to the other party all that he knows or ought to know about the transaction. Declarations - The declarations section of an insurance contract identifies the parties to the contract and dictates that the following provisions constitute an insurance contract. For this meeting, those 13 topics have been grouped by content in the following papers: (a) Agenda Paper 2A Presentation of insurance contracts on the statement of A person has insurable interest in his own life. As stated in Section 34 of the Marine Insurance Act, 1963, over-insurance and double insurance are valid unless the policy otherwise provides. He is under a duty to disclose accurately all factual information known to him. The insurer can recover the loss only if it is proximately caused by any of the perils insured against. It is to provide against risk and insecurity that insurance came into being. Get access to this section to get all the help you need with your essay and educational goals. Existing research on insurance contract theory emphasizes information problems and demand side issues when explaining contract structure. The papers for this meeting provide an updated analysis about 13 of the 25 topics discussed in Agenda Paper 2D Concerns and implementation challenges for the October 2018 Board meeting. 6. The common factor is that the insurer or underwriter alone determines ‘what is material’. He knows more about the subject-matter of the contract than the other party (the insurer). The website is funded by adverts which cover the cost of our hosting and domain renewal. Short essay on contracts of indemnity. ... Traditionally- Life insurance is a long term contract and the average term is about 15 years. Section 55 of the Marine Insurance Act, 1963 lays down that unless the policy otherwise provides, the insurer is liable for any loss proximately caused by a peril insured against. The assured can. Advantages/Utilities/Importance. The life insurance contract must have all the essentials of a valid contract. A large number of people get insurance policies and make the payment of premium to the insurer. J (2013, September 19). The English Law on insurance contracts as it stands today contains some rules which are arguably pro-insurer and consequently highly prejudicial to the assured. The insurer needs to trust that their client is disclosing all relevant information to them regarding the object that they are insuring and in return the insured needs to trust that the insurer will pay out in the event of a legitimate claim. The following persons have insurable interest in the subject-matter of insurance in case of a fire policy: (i) A person has insurable interest in the property he owns. Re-Insurance 6. The APEC business advisory council If Mr. X insurers with A for Rs.80,000, with B for Rs. Discuss. Supplyside factors, especially risk - Man may meet an untimely death. This policy is taken up for a specific period known as ‘endowment period’. The actual amount of loss suffered is compensated and the value of policy is only the maximum limit. IFRS Foundation. Agents also supply this form. It cannot be revised based on current risk status. ?6,150 and failed to inform him of a higher offer of ? The assured must have an actual interest called the insurable interest in the subject-matter of the insurance. Students can use our free essays as examples to write their own. The re-insurer is not liable to the assured. Life insurance policy may be ‘with profit’ or ‘without profit’. EssaySauce.com has thousands of great essay examples for students to use as inspiration when writing their own essays. It is the existence of insurable interest in a insurance contract that differentiates it from a wagering contract. Letter to the FASB and IASB. Marine insurance provides protection against all types of sea-risks. If the person does not die upto the maturity of the policy, he shall get back the insured amount after the maturity of the policy. ‘ Non-Disclosure Non disclosure is the failure to disclose material information. This policy is popular with those merchants who make regular and frequent shipment of goods through an established route. The floating policy covers several lots of goods lying at different places under one insurance cover. Insurance on demand (also IoD) is an insurance service that provides clients with insurance protection when they need, i.e. Material facts as defined in the Marine Insurance Act 1906: ‘every circumstance is material which would influence the judgment of a prudent insurer in fixing the premium or determining whether he will take the risk’. 5. Image Guidelines 4. Facts which must be disclosed: ‘ Facts which make a risk greater than usual ‘ Facts which would increase the possibility of a loss ‘ Previous claims or losses ‘ Facts which reduce an Insurer’s subrogation rights ‘ The existence of other Policies ‘ Facts relating to and descriptions of the subject matter of the insurance. Material facts have been statutorily defined on two occasions: The Marine Insurance Act 1906, Section 18(2), provides: “Every circumstance is material which would influence the judgment of a prudent underwriter in fixing the premium or determining whether he will take the risk”. Fundamental Principles or Features of an Insurance Contract 3. A contract of insurance is enforceable if and only if the risk has been attached. The insurer’s right to subrogation arises only when he pays the loss for which he is liable under the policy. IASB (2013). It is not easy to define material fact. common knowledge, current affairs) ‘ Facts which lessen the risk (security fittings, sprinklers, alarms) ‘ Facts which the Insurer should have noticed from other information given (e.g. Marine insurance is an arrangement by which the insurer undertakes to compensate the owner of a ship or cargo for complete or partial loss at sea.