Principles of valid contract special principles of life insurance
Principles of Indian Insurance
Transcript of Principles of Indian Insurance
-
8/12/2019 Principles of Indian Insurance
1/11
Principles of Insurance
Presented By:
NARENDAR REDDY
-
8/12/2019 Principles of Indian Insurance
2/11
Principle of Indemnity
Indemnity means a guarantee or assurance to put the
insured in the same position in which he was
immediately prior to the happening of the uncertain
event. The insurer undertakes to make good the loss It is applicable to fire, marine and the other general
insurance.
Under this the insurer agrees to compensate the
insured for the actual loss suffered.
-
8/12/2019 Principles of Indian Insurance
3/11
According to the principle of indemnity, an insurance
contract is signed only for getting protection against
unpredicted financial losses arising due to future
uncertainties. Insurance contract is not made formaking profit else its sole purpose is to give
compensation in case of any damage or loss
However, in case of life insurance, the principle of
indemnity does not apply because the value of human
life cannot be measured in terms of money Pofit
-
8/12/2019 Principles of Indian Insurance
4/11
Principle of Utmost Good Faith
Both the parties i.e. the insured and the insurer should
a good faith towards each other.
The insurer must give the complete, correct and clear
information of the subject matter
The insurer must give the complete, correct and clear
information regarding terms and conditions of the
contract
This principle is applicable to all contract of
insurance i.e. life, fire and marine insurance
-
8/12/2019 Principles of Indian Insurance
5/11
Principle of Subrogation
As per this principle the insured is compensated forthe loss due to damage to property insured, then the
right of ownership of such property passes on the
insurer.
This property is corollary of the principle of
indemnity and is applicable to all contracts of
indemnity
Subrogation means substituting one creditor foranother
Principle of Subrogation is an extension and another
corollary of the principle of indemnity. It also applies
to all contracts of indemnity
-
8/12/2019 Principles of Indian Insurance
6/11
According to the principle of subrogation, when the
insured is compensated for the losses due to damage
to his insured property, then the ownership right of
such property shifts to the insurerThis principle is applicable only when the damaged
property has any value after the event causing the
damage. The insurer can benefit out of subrogation
rights only to the extent of the amount
-
8/12/2019 Principles of Indian Insurance
7/11
Principle of Insurable Interest
The insured must have the insurable interest in thesubject matter of the insurance
In life insurance it refers to the life insured
In the marine insurance it is enough if theinsurable interest exists only at the time ofoccurrence of the loss
In the fire and general insurance it must be
present at the time of taking policy and also at thetime of occurrence of loss
The owner of the party is said to have insurableinterest as long as he is the owner of the it
-
8/12/2019 Principles of Indian Insurance
8/11
It is applicable to all contracts of insurance
The principle of insurable interest states that the
person getting insured must have insurable
interest in the object of insurance. A person has an
insurable interest when the physical existence of
the insured object gives him some gain but its
non-existence will give him a loss. In simplewords, the insured person must suffer some
financial loss by the damage of the insured object
-
8/12/2019 Principles of Indian Insurance
9/11
Principle of Proximate Cause
The loss of the property can be caused by morethan one cause in succession to another
The property may be insured against some
causes and not against all causesIn such an instance, the proximate cause or
nearest cause of loss is to be found out
If the proximate cause is the one which isinsured against, the insurance company isbound to pay the compensation
-
8/12/2019 Principles of Indian Insurance
10/11
Principle of Contribution
The principle is a collar of the principle of indemnity
It is applicable to all contracts of indemnity
Under this principle the insured can claim the
compensation only to the extent of actual loss either
from any loss either from any one insurer or all theinsurers
-
8/12/2019 Principles of Indian Insurance
11/11
THANK YOU