INTRODUCTION:
An insurance contract has been classified in various ways .The chief forms of insurances comprise life fir and Marine. Many other risks are also covered by Insurance for interance, accidents, sickness, bad debts, motor vehicles, burglary etc. Since Insurance is a contact therefore the general principles of Contracts viz, offer and acceptance, Consideration free consent. Capacity of Parties, Lawful object etc. All apply to insurance contacts .Prior to 1938, the law of insurance was not codified in India.
The insurance Act1938 was passed to contract the working and the activities of the companies crossing in the business of life, Fire marine and accident insurance. On19th January 1956 life insurance was nationalizes by the Government and the life insurance corporation Act 1956 was passed . Thereafter the provision of ht Prevision act of 1938 din not apply to life insures .In 1963, the Marine insurance act was passed to regulate the contracts of marine insurance and the affairs of the marine insurance companies.
Meanings of insurance is form of contract under which one party agrees in return for a consideration to pay an agreed sun of money to another party to make food for a less damage, injury to something of value in which the insured has a pecuniary interest as a result of some uncertain event.
Insurance is such contract between the two parties in which insurance companies (one party) promises with the assures that in case of any financial or life loss due to any reason, company will compensate the loss. The insured has to pay premium to insurance company in exchange for shifting of risk .the specific amount for which the policy is purchased form insurance company is called insured amount.
Parties:
Thus there are two parties to a contract of insurance the insure and the insured. The person undertaking the risk or liability is called the insure (Insurance Company).
Consideration or Premises:
The consideration in return for which the insure agrees to make good the loss is known as the premium. The premium is to be paid by the insured to the insurer (the insurance company).
Subject matter:
Thing or property insured is calling the subject matter if insurance. The interest if the insured in the subject mater is called insurable interests.
Policy:
Policy is a formed written document containing the terms of the contract of insurance. It is stamped, singed issued by the insurer .Expect in marine insurance, the existence of policy is not necessary for the validity of a contract of insurance.
Following are the some principle of insurance.
1. INSURABLE INTEREST:
The presence of insurable interest is a legal requirement.An insurance contract without the existence of insurable interest is not legally valid. The object of this prevents insurance form gambling contact.
2. UTMOST GOOD FAITH:
The insurance contract depends upon the utmost good faith. Both the parties should disclose all the fact to each other. Any false information makes the contract invalid.
3. PRINCIPLES OF INDEMNITY:
The principle of indemnity is bases on the idea that the assured in the case of loss only shall be compensated against the actual total loss Marine and fire insurance contacts are considered the contact of indemnity .if no loss happens the question of indemnity may not raise. The contact of life insurance is not a contract of indemnity.
4. DOCTRINE OF SUBROGATION:
This principle is applied only in marine and fire insurance .according to this principle where loss occurs and insurance company pays the total loss then company is entitled to all the rights against the third party in respect of loss so aid for. It lays down a principle which is quite equitable .Suppose Mr. Kashif has damages the Motor car of Mr. Nasir. If the pays loss to Mr.Naisr Rs.10000. Now if Mr.Naisr also claims the same amount form insurance company for the indemnity under his policy the he will not be allowed to collect the damages damage from Mr. Kasif. On the other hand insurance company will receive the amount which is collected from Mr.Kashif. It is called subrogation.
5. DOCTRINE OF CONTRIBUTION:
Sometimes one person can get his goods insured form more the one companies. In case of loss each company will contribute that proportion of the loss.
6. PROXIMATE CAUSE:
According to this principle, the insurance company will pay for compensation of the incident that is the immediate cause of loss. In case of loss proximate or the nearest cause should be considered.
7. CANCELLATION:
Both parties cancel the policy before its expiry date. On the date of cancellation period of the policy comes to an end.
8. ATTACHMENT OF RISK
An insurance contract cannot be enforced without the element of risk .
9. MITIGATION OF LOSS:
The policy holder must do every thing to minimize the loss and to save what is left. This principle makes the insured mot careful about his insured property.
10. ARBITRATION:
The arbitration is to be appointed in writing both the parties in case of differences .It reduces the litigation.
