Account Disable 12. 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. These two features — contract and claim — are at the heart of most insurance … Here is an essay on the risks faced by insurance companies. Large funds are collected by way of premiums. Many of these representations are responses to questions to determine whether the applicant is insurable or not and how much premium should be charged. ...(download the rest of the essay above). The dissertation includes two essays on insurer's risk management. After paying this amount, he is allowed to claim a contribution from his co-insurers in proportion to the amount which each has undertaken to pay in case of loss. The insurer must inform the insured in writing about the insured’s duty of disclosure and the effect of non-disclosure. Insurance provides security against such losses. This is merely a manifestation of the insurer’s duty to have due regard to the insured when drafting its policies. Life insurance contract is not a contract of indemnity. 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. This policy is popular with those merchants who make regular and frequent shipment of goods through an established route. In many ancient societies, merchants and traders pledged their ships or cargo as security for loans. A breach of good faith may take the form of misrepresentation, either innocent or fraudulent or/and non-disclosure. A level premium (constant rate) is charged throughout the term. COMPONENTS OF UTMOST GOOD FAITH Utmost good faith is usually divided into three components: representations, non disclosures and warranties. The sum assured is payable either on the death of life assured or on the expiry of a fixed period, whichever is earlier. The insurer must also disclose any relevant policy terms that have major consequences such as denial of claims. In the following three cases insurable interest is presumed and no proof is necessary, viz. (iv) Partner has insurable interest in the property of partnership firm. As such, the duty of good faith can be seen as involving both an objective and subjective element. Types 4. Contracts, Essay, Insurance, Insurance Management, Management. Insurance is one the sectors that, among others, started to carefully investigate the possibilities of blockchain. However, despite displaying clear terms on our sites, sometimes users scan work that is not their own and this can result in content being uploaded that should not have been. This can happen in a variety of ways: ‘ making a false claim; ‘ intentionally leaving out relevant information (either in entering into the policy or in making a claim); The insured’s duty of good faith is generally only that of disclosure and the duty to not make false claims. The shipping company may insure the freight to be received which is called ‘Freight Insurance’. Yes! The duty does, however, involve notions such as honesty and fairness. The paper has been drafted by the teams working on the insurance contract law review at the English and Scottish Law Commissions and is intended simply to promote discussion before the UK Essays. In case of fire insurance, insurable interest must be present both at the time of insurance and at the time of loss. It is not easy to define material fact. Double Insurance 5. 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. It does not apply to life and personal accident insurances. The employment opportunities also increase by large investments made by insurance companies. The APEC business advisory council The tort adopts the principle that insurance is entered not only for profit but for peace of mind. Insurance Contracts │ Presentation of insurance contracts on the statement of financial position Page 5 of 25 Offsetting assets and liabilities differs from treating a set of rights and obligations as a single unit of account.2 Premium allocation approach 15. 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. However, it becomes difficult to determine indemnity when the loss occurs. Such persons to cover the risk of business due to fire, undertake the consequential loss policy. Advantages/Utilities/Importance. 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 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. Declarations - The declarations section of an insurance contract identifies the parties to the contract and dictates that the following provisions constitute an insurance contract. 40,000. 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. protection of the insured. The next essential principle of insurance is that in the event of some mishap to the insured property, the assured must take all necessary steps to mitigate the loss. 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. 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 This is subject to the maximum amount for which the subject-matter is insured. What does ‘act with due regard’ or ‘fairness’ mean? Immense are the benefits of insurance to the modern business. Similar rules apply to employers’ liability insurance. It will generally state the intentions of the parties with regard to the subject-matter of the insurance, the term of the policy, the risks covered by the policy, the limits on payment in the event an insured risk … These schemes are beneficial to poor people and also help in establishing social justice. A proposer should disclose all material facts at the time of making the proposal not only those facts which he honestly thinks to be material but every fact which a reasonable man would have thought to be material. If this option is not exercised, the policy continues as a whole life policy with premiums ceasing at a certain age. For long term contracts, the insurer is obliged to accept the renewal premium if the insured wishes to continue the contract. The principle of contribution is applied to any insurance which is a contract to indemnity. This page of the essay has 2092 words. Exposure Draft- Insurance Contract. The proposal form is scrutinised by the company and if the company is satisfied, the proposal is accepted. The website is funded by adverts which cover the cost of our hosting and domain renewal. Nevertheless, the result for the broker is still the same – whatever losses the insured suffers as a result of the broker’s actions will result in the insured bringing a claim of negligence against the broker. Longino. The insurer’s right to subrogation arises only when he pays the loss for which he is liable under the policy. Consequently he is under a duty to disclose correctly all material facts known to him to the insurer, so that insurer may be in a position to make an accurate estimate of the risk that he is undertaking. This contract does not help in controlling or preventing fire but it is a promise to compensate the loss. The assured knows more about the subject-matter of the contract than the other party (the insurer). For other businesses, disclosure is revived. After receiving the installment of first premium, the insurance company prepares the insurance policy. The common factor is that the insurer or underwriter alone determines ‘what is material’. The insurers as between themselves are liable to contribute to the loss in proportion to the amount for which each one is liable. The analysis of this research will be limited to and focus on the insurance plans and health insurance systems in the US. EssaySauce.com is a free resource for students, providing thousands of example essays to help them complete their college and university coursework. That is, it is the C.I.F. It’s important that the contract specifically points out the type of insurance that the client is going to attain should he or she decide to sign it. The non disclosure may either be innocent of fraudulent. Generally, the cargo owner takes the Voyage Policy for each separate shipment of goods. So the proposer must answer all the questions correctly. The contract of fire insurance is a contract of indemnity. In fire insurance, the assured must have insurable interest in the subject-matter of the insurance. The actual amount of loss suffered is compensated and the value of policy is only the maximum limit. If a person has insured his house for Rs. Without insurable interest the contract of insurance is void. ?6750 which he had subsequently received. A banker has an insurable interest in the property mortgaged to it against a loan. A large number of people get insurance policies and make the payment of premium to the insurer. An employer can insure the lives of his employees because of his pecuniary interest in them. The aspects of Misrepresentation in contract law Misrepresentation is a false statement of fact and law, which induces the represented to enter a contract. offer, acceptance, and consideration will not guarantee a legally enforceable contract”. THE DUTY OF GOOD FAITH The duty is described as requiring the insurer and the insured to act honestly with each other throughout the duration of the policy. Fundamental Principles or Features of an Insurance Contract: Essay # 6. It is not a fiduciary duty in that it does not require a party to regard the other party’s interest higher than its own. More recently in Australia, the insurer’s post-contractual duty of good faith has been described by the Queensland Supreme Court in Re Zurich Australian Insurance Ltd [1998] QSC 209 as acting with due regard to the insured’s interest in situations where the insurer has a conflict of interest (such as in paying out on claims). Essay On Misrepresentation In Contract Law 932 Words | 4 Pages. Life insurance policy may be ‘with profit’ or ‘without profit’. When deciding whether to approve claims, the insurer’s interests may conflict with the insured’s interests. These policies are taken out to make provision for the dependants. Based on primary research, we have identified the following research components: Health limitations of the health insurance plan set-up. Yes! Valued policy is not a contract of indemnity. EssaySauce.com has thousands of great essay examples for students to use as inspiration when writing their own essays. The floating policy covers several lots of goods lying at different places under one insurance cover. if the ‘ proposer has referred to other records) ‘ Facts related to the Insurer’s survey ‘ Facts covered by policy conditions ‘ Facts which the proposer could not reasonably be expected to know ‘ Convictions which have been spent under the Rehabilitation of Offenders Act 1974. Such examination can be conducted only by a doctor approved by the insurance company. This policy covers the loss arising out of water leakage from sprinkles which are set up to extinguish fire. 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. Such policies are usually taken by partnership firms to provide for the payment of the capital of the deceased partner. A contract of life insurance is not a contract of indemnity. Insurance has helped the development of international trade on a large scale. 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. All the Questions i here currently do not have answers mentioned but they’ll be added in the near future. The assured can, in the event of loss recover the actual amount of loss from the insurer. The goods also destroy in transit. Terms of Service 7. 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. This policy is also known as ‘Average Policy’ because the insurer usually inserts the average clause in the policy. A contract is an agreement which normally consists of an 'offer ' and an 'acceptance ' and involves the 'meeting of the minds ' or consensus between two or more parties with the intention to create a legally enforceable binding contract. The life insurance contract must have all the essentials of a valid contract. Insurance not only provides protection against risks but it is also a good form of investment. There are also examples of contract law cases and some free law essay examples. All insurance contracts are based on the concept of uberrima fides, or the doctrine of utmost good faith. The following three things are covered in the subject-matter of marine insurance: The goods to be sent through ship is called ‘Cargo’. Marine insurance is an agreement by which the insurer undertakes to compensate the owner of a ship or cargo for complete or partial loss at sea. Content Guidelines 2. The law imposes a positive duty of disclosure as part of a general duty of uberrimae fidei especially on the insured. Insurable interest is necessary to support every insurance contract. The modes of discharge by the insurer are alternative. After the proposal form has been submitted, a medical examination of the person to be insured is arranged. 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. 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. After reading this essay you will learn about:- 1. Article shared by. Re-installment or Replacement Policy: In such a policy, the insurer has the right to reinstate or replace the property destroyed instead of paying cash. 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 … The insurer can recover the loss only if it is proximately caused by any of the perils insured against. Fundamental Principles/Essentials/Features/Characteristics of Fire Insurance Contract: Fire insurance contract is based on certain fundamental principles. for students : all the ingredients of a good essay, Home » Law essays » Insurance contracts. The injured party must avoid the contract as a whole; an insurer cannot at the same time avoid liability for an individual claim and affirm the rest of the contract. A material fact is one which goes to the root of contract of insurance, and which must be stated with perfect degree of accuracy. In other words, under marine insurance, the insurer undertakes to indemnify the insured in the manner and to the extent thereby agreed against marine losses. If the risk is not run the consideration fails, and therefore the premium received by the insurer must be returned The premium is to be returned even where the risk is not run or could not be run due to the fault, will or pleasure of the assured. These risks and uncertainties are increasing day by day due to increase in fastness of life. The rule of caveat empter, i.e., let the buyer beware, does not apply to the contracts of insurance. Where there are two or more insurances on one risk, the principle of contribution applies between insurers. The insurer must draft its policies in clear, plain English so that the policy can be easily understood by the insured. Agents also supply this form. (ii) A creditor has an insurable interest in the life of his debtor. 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. 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. Short essay on contracts of indemnity. If Mr. X insurers with A for Rs.80,000, with B for Rs. This policy is taken up for a specific period known as ‘endowment period’. 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. This policy is also called ‘Ordinary Life Policy’. All of our essays are donated in exchange for a free plagiarism scan on one of our partner sites. A man may insure with as many insurers as he pleases. The loss resulting from the death of life assured cannot be estimated in terms of money and only a fixed amount is paid. If at any … 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. According to Indian Contract Act, 1872, a valid contract must contain the following essentials: The contract of life insurance is a contract of utmost good faith. Unemployment, health accident and old age insurances. 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. Persons, by taking different types of life insurance policies, may provide against every type of his social and business obligation, i.e., for the education or marriage of the children, etc. Spreading of risk: Insurance facilitates spreading of risk from the insured to the insurer.
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