RESEARCH BACK UP

 INTRODUCTION A person is at liberty to insure his vehicle with more than one insurance company. However, if he suffers a loss all insurers concerned will “contribute” towards the payment to put him in the position he was just prior to the loss. He will not be allowed to claim separately from each of the insurers as this may lead to his receiving more than the value of his loss. Contribution Defined Contribution can be defined as the rights (or the exercise of the rights) of an insurer to call upon other insurers similarly (though not necessarily equally) liable to the same insured to share the cost of an indemnity payment. The important point here is that if an insurer has paid a full indemnity, it can recoup an equitable proportion from the other insurers of the risk. However, if a full indemnity has not been paid, then the insured will wish to claim from the other(s). The principle of contribution enables the total claim to be shared in a fair manner. Contribution and a Common I...

 INTRODUCTION From time immemorial, man has sought ways of controlling risk to which individuals either private or grouped together as commercial and business ventures are exposed. Until about 20 years ago, the concept of risk management was regarded as a subject and an arm of practical management. It is a multidisciplinary subject which brings together the ideas and techniques drawn from various disciplines, to provide sound conceptual functions and a set of tasks for the analysis and positive control of risks. It was widely acclaimed that risk management was first introduced in the United States of America in the early fifties as a result of dissatisfaction on the part of the corporate and individual insurance buyers with the inadequate premium discount given by insurance underwriters to compensate for higher risk retention and the loss prevention methods being adopted for their insured risks. The Concept of Risk in Insurance (Conditions of Certainty, Conditions of Risk and Co...

 INTRODUCTION The purpose of insurance is to provide financial compensation in the event of a loss. Therefore, if an insured suffers a loss or an accident and if the loss is covered by his insurance policy he can make a claim against his insurer. Making claim is simply an application by the insured for the payment of monies due under his insurance contract.  Claim Procedure Before an insurer will pay a claim, certain conditions must be satisfied. A loss or insured event must occur. The insured must suffer some financial loss before compensation is paid.  This is the case in non – life insurance. For life insurance, the insured event must have taken place, such as the death or survival of the insured. The insurer must be notified. Insurers usually request further details and completion of a claim for when they are notified of a loss. Proof must be provided. The onus is on the insured to show that a loss or event covered by the insurance has occurred. The insured must also ...

 INTRODUCTION If you want to buy some insurance, how do you go about it? Who do you ask? What will the insurer’s seller want to know? First of all, you need to make contact with the people who sell insurance. Next, you have to provide the insurer with enough information to enable him decide whether or not he wants to sell insurance; then you would need to complete a proposal form and the insurer will have to issue various documents setting out t the details of the contact and providing proof that a contract of insurance exists. In this unit we will look at each stage of this process in turn. From Proposal to Policy If you want to buy insurance, you must contact the people who sell it. Insurance is sold to the general public in two ways: by salesmen and by intermediaries. At this stage the applicant for insurance cover is known as the proposer and on completion of all the processes a policy form is issued evidencing the proof that a contract of insurance exists....

 INTRODUCTION In most non – life insurance, the contracts last for only a year, but subject to annual renewal, if the insured and insurer so agree to renew. However, in the case of life insurance contracts they last for many years, the insurer is obliged to continue to provide cover for the entire period. So it is not necessary for such a policy to be renewed on a periodic basis. When a policy is renewed for another year, a legally separate contract is created. Offer, acceptance and all other requirements for the formation of insurance contracts must again be present. This means, the insured must disclose any material facts which have developed or altered since the previous year. Even within the first year or on renewal, within the period of renewal and even if the premium had been paid, the parties to the contract of insurance may cancel the policy within the provisions contained in the policy. Renewal Procedures There is no compulsion on the insured and insurer to renew annual ...

INTRODUCTION This unit will teach the definition of risk, the classification of risk, the definition of insurance, and the market insurance intermediaries. It is important that you grasp this concept before proceeding to the next unit.  What is Risk? Risk can simply be defined as the unlooked for, unwanted event in the future. Risk is the sugar and salt of life. Risk brings sweetness and bitterness to life. Life is full of risk and any individual, organization or state can be a victim any day. In everyday life, risk comprises the steady toll of fire, accident, theft, explosion and other similar events. The list is lengthy and costly in terms of money and in terms of human pain and suffering. Classification of Risk There are several different ways of looking at risk, but we adopt the classifications based on the nature of risk and its insurability. Pure Risks – These are risks that can result only in loss, such as a plane crash, physical loss or damage to goods by fire or theft or ...

 INTRODUCTION Most people and most organizations, in every kind of society need some sort of insurance cover. The only exceptions are people without property and dependents. Everyone else has possessions or potential liabilities that need to be protected. Insurance contract represents only one way in which people can guard against misfortune. For example, most primitive societies have developed systems of mutual aid or help so that if one member suffers a financial setback the others club together in order to repair the damage. Such mutual aid probably cannot work unless all members are exposed to roughly the same risks, and will be unfair if some members have a potential for greater and more frequent losses than others. Modern insurance represents a more equitable system. Insurance developed when primitive societies found themselves unable to support trade and manufacturing activities because of the significantly increased size and/or frequency of losses involved. Marine insurance...

INTRODUCTION Until recently, the term “assurance” was used when referring to the life sector of insurance. The terms “life insurance” and “life insured” are now commonly used. Life insurance or life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the insured's death. In return, the policy owner (or policy payor) agrees to pay a stipulated amount called a premium at regular intervals. As with most insurance polices, life assurance is a contract between the insurer and the policy owner (policyholder) whereby a benefit is paid to the designated beneficiary (or beneficiaries) if an insured event occurs which is covered by the policy. To be a life policy the insured event must be based upon life (or lives) of the people named in the policy. Insured events that may be covered include:  death,  diagnosis of a terminal illness  diagnosis of a critical illness  disability due to ill health...

 INTRODUCTION An insurance contract is an agreement between an insurance company and the individual effecting the insurance cover. Such an individual is referred to as the insured. An insurance contract falls under the general heading of simple contracts. Hence, it is a “legally binding agreement” made between two or more parties, by which rights are acquired by one or more to act or forbearances on the part of the other parties. Generally persons who effect insurance do it either because they are legally required to do so or they cannot accommodate the risks themselves or both. The Nature of Insurance Contracts Insurance contracts must satisfy the requirements of simple contracts. These requirements are considered below.  Offer and Acceptance An offer is a communication of the contract terms by one party to another. Acceptance refers to the letter’s agreement of those terms. In motor insurance contract, the offer is made by the proposer when he completes a proposa...

INTRODUCTION The practice of insurance is guided by six basic principles in addition to the basic contractual requirements discussed previously. These basic principles i.e. insurable interest, utmost good faith, proximate cause, indemnity, subrogation and contribution were established and later many of them have been upheld by the courts with the strength of the law behind them, these principles have now become the foundation stones of modern insurance practice . A person cannot gain an understanding of the practice of insurance without first understanding these basic principles or doctrines. Therefore, starting from this unit, we shall deal with the principles of insurable interest, utmost good faith, proximate cause, indemnity, subrogation and contribution. Insurable Interest The term “Insurable Interest” refers to financial or pecuniary involvement capable of being insured. Hence it eliminates emotional attachment to property. Therefore the owner of a motor car may wish to d...