Insurance Definition

Insurance is a contract whereby, in return for the payment of premium by the insured, the insurers pay the financial losses suffered by the insured as a result of the occurrence of unforeseen events.

CONTRACT OF INSURANCE
In between the insured and insurer INSURED:Party effecting insurance, (Individual, Company, Firm, Corporate body etc., with legal status) Party granting the protection under an insurance policy. Is the evidence of contract
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INSURER:-

Policy:-

PRINCIPLES OF INSURANCE

1. 2. 3.

Rate of contribution or premium The degree of hazard it is exposed to.

Classification of various types of properties.

IMPORTANT ELEMENTS INVOLVED IN

THE CONCEPT OF INSURANCE
Subject matter of insurance.(property, human life, machinery, goods etc.,) The PERIL (risk) The financial loss.

Risk
The term Risk is used to describe all the accidental happenings which produce a monetary loss. For e.g.: A factory catching fire, a ship sinking etc.

Principles of Insurance
Utmost Good Faith Insurable Interest Indemnity
Subrogation Contribution

Proximate Cause

Utmost Good Faith

Good faith- Let the buyer beware

Declaration of all material Information about the subject mater of insurance

Insurable Interest
The legal right enjoyed by the owner of a property to insure is called Insurable Interest. The insurance will become null and void, without the insurable interest.

Indemnity
The principle of Indemnity states that under the policy of insurance, the insured has to be placed after the loss in the same financial position in which he was immediately before the loss.

Proximate Cause
The active efficient cause that sets in motion a train of events which brings about a result without intervention of any force started and working actively from a new independent source.

SCOPE OF INSURANCE:
General Insurance is divided into three categories: FIRE, MARINE & MISCELLANEOUS

FIRE INSURANCE
FIRE INSURANCE BUSINESS: Loss due to FIRE, LIGHTINING, EXPLOSION, IMPLOSION,, RIOTS & STRIKES, IMPACT BY RAIL, AIRCRAFT DAMAGE, EARTH QUAKE, FLOOD, STORM, TEMPEST, TORNADO, TYPHOON, CYCLONES & LAND SLIDE.

MARINE INSURANCE BUSINESS: This is the oldest branch of Insurance comprising HULL & CARGO.
Hull Insurance deals the Loss associated with floating crafts, Cargo insurance provides cover in respect of loss or damage to goods during transit by rail, road, sea or air.

MISCELLENOUS INSURANCE BUSINESS: Mainly includes the motor business, accident, aviation , engineering and guarantee insurances.