TOPIC:INSURANCE

CONTRACT

PRESENTED BY
ASHMILY BABY
 WHAT IS AN INSURANCE
CONTRACT?

An insurance policy is a legal contract that is

agreed upon by two or more parties. The purpose of
insurance is to indemnify the insured, or to bring
insured back to the same financial position insured
were in before insured suffered the covered loss.
 PARTIES TO INSURANCE
CONTRACT

 INSURER
 INSURED.
 REQUIREMENT OF AN
INSURANCE CONTRACT.

 Insurable interest
 Offer and acceptance
 Consideration
 Legal capacity
 Utmost good faith
INSURANCE DOCUMENTS

 PROPOSAL TILL COMMENCEMENT

 Proposal form
 Agent report
 Medical report
 Personal statement
 Special questionnaire
 Proof of age
 Deposit receipt
CONTINUED..

 AFTER COMMENCEMENT
 Policy document
 Every year renewal premium receipt
 Renewal notices
 Endorsement
 Bonus notices
 Need analysis form
 Prospectus.
 THE BASICS PARTS OF AN
INSURANCE CONTRACT
1.Declarations
2.Definitions
3.Insuring Agreement
4.Exclusions
5.Conditions
6.Deductibles
7.Miscellaneous Provisions
8.Insured
9.Rider And Endorsement
a) Declarations: Statements about the
property or life to be insured.
b) Definitions: Section of the policy in
which the insurer explains the meaning of
key words or phases in the contract.
c) Insuring Agreement: Part of the
insurance contract that states the major
promises of the insurer. Two basic forms
are named peril coverage and all-risks
coverage
d) Exclusions: Listing of perils, losses, and
property that are not covered under the
insurance contract.
e) Conditions: Provisions that qualify or place
limitations on the insurer’s promise to perform.
Deductibles Amount of your claim that you agree to
pay before the insurer pays the rest.
f) Miscellaneous Provisions: General provisions
common to insurance contracts that address the
relationship between the insurer and the insured,
and the responsibilities of the insurer toward third
parties.
g) Insured: Person(s) protected by the insurance
policy.
h) Rider And Endorsement: Clause or term added to
your insurance policy to provide protection, for an
additional cost, for risks not covered in a basic
policy.
 ELEMENTS OF
INSURANCE CONTRACT
The insurance contract involves—
A. the elements of the general contract, and
B. the element of special contract relating to
insurance.
General Contract
a) Offer and Acceptance
The offer for entering into the contract may
come from the insured.
The insurer may also propose to make the
contract. Whether the offer is from the side of
an insurer or from the side of insured, the main
fact is acceptance. Any act that precedes it is
the offer or a counter-offer. All that preceded
the offerer counter-offer is an invitation to
offer.
b) Legal Consideration
The promisor to pay a fixed sum at a given
contingency is the insurer who must have some
return or his promise. It need not be money only,
but it must be valuable.
c) Competent to make the contract
Every person is competent to contract;
• Who is off’ is an age of majority according to
the law,
• Who is of sound mind, and
• Who is not disqualified from contracting by
any law to which he is subject?
d) Legal Object
To make a valid contract, the object of the
agreement should be lawful. An object that is,
(i) not forbidden by law or
(ii) is not immoral, or
(iii) opposed to public policy, or
(iv) which does not defeat the provisions of any
law, is lawful.
e) Free Consent
Parties entering into the contract should enter
into it by their free consent.
The consent will be free when it is not caused
by—
(1) coercion,
(2) undue influence,
(3) fraud, or
(4) misrepresentation, or
(5) mistake.
 SPECIAL CONTRACT
a) Insurable interest
For an insurance contract to be valid, the insured
must possess an insurable interest in the subject
matter of insurance.
The insurable interest is the pecuniary interest
whereby the policy-holder is benefited by the
existence of the subject-matter and is prejudiced
death or damage of the subject- matter.
b) utmost good faith
The doctrine of disclosing all material facts is embodied in the
important principle ‘utmost good faith’ which applies to all forms
of insurance.
Both parties to the insurance contract must be of the same mind
(ad idem) at time of contract. There should not be any
misrepresentation, non-disclosure or fraud concerning the
material.
c) principle of indemnity
According to this principle, the insurer undertakes to put the
insured, in the event of loss, in the same position that he occupied
immediately before the happening of the event insured against, in
the certain form of insurance, the principle of indemnity is
modified to apply.
d) Doctrine of Subrogation
The doctrine of subrogation refers to the right of the insurer to
stand in the place of the insured, after the settlement of a claim,
in so far as the insured’s right of recovery from an alternative
source is involved.
e) warranties
There are certain conditions and promises in the insurance
contract which are called warranties.
f) Proximate cause
Proximate cause means the actual efficient cause that sets in
motion a train of events which brings about result, without the
intervention of any force started and worked actively from a new
and independent source.
g) Assignment or Transfer of Interest
It is necessary to distinguish between the assignment of (a)
the subject-matter of insurance, (b) the policy, and (c) the
policy money when payable.

h) Return of Premium
Ordinarily, the premium once paid cannot be refunded.
However, in the following cases, the refund is allowed.
Thank you