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Business Environment and Law-Law Of Insurance

Fundamentals of Law of Insurance

   Posted On :  08.05.2018 05:03 am

The contract of insurance is called an aerator contract, because it depends upon an uncertain event. Lord Mansfield described insurance as “a contract on speculation.”

Fundamental Principles Of Insurance:
 
 
             Good faith,
 
             Insurable interest,
 
             Indemnity,
 
             Mitigation of loss,
 
             Attachment of risk,
 
             Causa proxima. 

Good Faith:


A contract of insurance is a contract, uberrimae fidei, a contract based on utmost good faith and if the utmost good faith is not observed by either party the contract may be avoided by the other.

Insurable Interest:

 
The assured must have an actual interest called the insurable interest, in the subject-matter of the insurance; either he must own part or whole of it, or he must be in such a position that injury to it would affect him adversely.

Indemnity:

 
Excepting life assurance and personal accident and sickness insurance, a contract of insurance contained in a fire, marine, burglary or any other policy is a contract of indemnity. 

Mitigation Of Loss:


In the event of some mishap to insured property, the owner (the insured) must act as though he were uninsured, and make every effort to preserve his property. 

Risk Must Attach:

 
A contract of insurance can be enforced only if the risk has attached.

Causa Proxima:

 
Make the insurer liable for loss, such loss must have been proximately caused by the peril 
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