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Published by: gaurav94163 on Apr 26, 2010
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LessonLaw of Insurance
Fundamentals Elements of InsuranceThe term insurance comes from the word insure, thedictionary meaning of which is ‘to guarantee’.For the purpose of law of insurance it can beunderstood as an arrangement for the payment of asum of money in the event of loss or injury.Insurance does not mean that unforeseen circumstanceswill not occur but ensures that the person is ready toface them.Importance of InsuranceInsurance has attained much popularity andimportance these days.Practically every type of risk to which a human being orproperty may be liable can be insured against.Insurance prevents or minimises the hindrances due torisks of various kinds.The essential requirements which must be present ininsurance are as under:-
1.The insured is really subject to risk; otherwise itwill amount to betting.2.The time and occurrence of risk must involve someuncertainty.3.Both the insurer and insured should not have anycontrol over the happening of the event insuredagainst.4.The risk insured against should not be very minorone; otherwise the cost of insurance may beuneconomical.5.The cost of insurance should not be prohibitive.
The risk must be capable of approximatemathematical estimation.MeaningInsurance is a contract in which one party, known asthe insured or assured , insures with another person,known as the insurer, assures or underwriters hisproperty or life, or the life of another person in whomhe has a pecuniary interest, or property in which he isinterested or against some risk or liability, by paying asum of money as the premium.General Principles of Insurance
Contracts of insurance (except life andpersonal accident insurance) are contracts of indemnity.
A typical contract of insurance involves anobligation on the part of the insurer to pay a sumof money to the insured upon the happening of some event.
In no case however, can insurer recover more thanthe amount insured.
The amount of depreciation is to be deducted fromthe loss suffered by the insured property.
Good Faith – 
There must be utmost good faith andfrankness between the insured and insurer.
The withholding of any relevant information ormisstatement of material fact may give the insurerthe legal ground to declare the contract void.
A new material fact which arises at any timeduring negotiations, or a fact which though earliernot material, becomes material owing to change of circumstances, must be disclosed as soon as theinsured comes to know of it.
 Insurable interest 
 – Insurable interest means someproprietary or pecuniary (monetary) interest.
A person is said to have an insurable interest whenis so situated with regard to the thing that he wouldhave benefit from its existence and loss from itsdestructions.Examples; Like car, car hypothecated, self insurance,Wife or husband insurance in the life of both of themseparately.

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