General Principles of Insurance Law

I. INTRODUCTION
1. Definition of insurance
2. The parties to the contract
The Insured
The Insurers – those insuring it and getting the premium
Insurance Companies – sec 190
Underwriters – sec 327
etention! Definition – e"a#uates #oss$ retain 100%! &eep premium 100%. If not!
share premium
3. C#assification of contracts of insurance – sec 2
'ccording to the nature of the e"ent – sec 101 ()arine Insurance* (+hat the,-re
insuring* sec. 101 par 3. Insure .ridge! get marine insurance protection and
indemnit, c#u.$ ship owners
/ec 109 fire insurance (po#icies* (ru#es o.ser"ed*
/ec 170 Casua#t, Insurance
/ec 177 /uret,ship
/ec 111 2ife Insurance
)IC34I5/U'5C6 – sma## insurances.
'ccording to the nature of the interest affected – persona# insurance! prop insurance!
#ia.i#it, insurance
• /ome secure mone, for happening of e"ent
• 3thers are contract of indemnit, (e7ists in prop insurance*
'ccording to the nature of the insurance
8. The nature of the contract of insurance
The su.9ect4matter of the contract of insurance – sec 3 an, contingent$ future e"ent$
create #ia.i#it,$ ma, .e insured$ su.9ect to pro"isions
2ife insurance – consent of spouse 53T 56C6//':
The su.9ect4matter of insurance – sec 2
o ' ph,sica# o.9ect
o ' chose4in4action
o ' #ia.i#it, imposed upon the assured
The description of su.9ect4matter
o To identif, the su.9ect4matter
o The &inds of description
o /pecific descriptions
Description of the #oca#it, of the su.9ect4matter
Description of other circumstances
o To show the nature of the ris&
o To define the ris&
;. Insura.#e interest – sec 10 (2ife Insurance*
/ec 13 – <rop Insurance
/ec 18 – Inchoate interest$ e7pecting -> (nothing insura.#e :6T* (BAR A!ORIT"#$
/ec 11 – I)<3T'5T$
/ec 20 – +hen insura.#e interest e7ists$ when insurance ta&es effect$ did not e7ist in
the meantime$ (#ife insurance e7.* (must e7ist =6>I55I5>! need not e7ist in the
65D*
/ec 28 – <artners
/ec 2; – +agering insurance
+hat constitutes an insura.#e interest
The necessit, for an insura.#e interest
Description of interest
The genera# ru#e
67press condition
<rospecti"e profits and conse?uentia# #oss – .usinesses app#ies. Insure e7pected
profits$ #oo& into ,our .usiness and its histor,$ from then on! compute e7pected
profits and then pa, for a contingenc,@ =U/I56// I5T6'CTI35 I5/U'5C6
<recarious nature of the interest
The time for insura.#e interest
Interest at the time of the #oss sometimes essentia#
etrospecti"e insurance
0. The Insurance Companies 'ct 1912
II. T%" &A'ING O T%" CONTRACT insura(le in)eres) *us) +a,e a pecuniar-
,alue. (/012 case3 +alper.$ (Lucena ,s Crawfor4 /025$ (PR"C"D"NT CA6"6$
Cre4i) car4 7 e7amp#e. =i##ing increases. <ena#ties! surcharges. 10% a month. =a##oon
effect. Interest! pena#t,! and surcharges must .e tempered. )ust .e C35/CI35'=26.
0%A (/C decision* C= announcementB /C decision +'/ 53T a <6C6D65T
/6TTI5>. C'/6 T3 C'/6 ='/I/A
Insura(le in)eres) cases 7 proof of #oss su.mission$ certificate of tit#e (TCT*$ fraudu#ent
c#aim@ )ortgageeCmortgagor situations! redemption periods for forec#osure of propert,$
corporation ownership$ period of 3 months for corp.$ indi"idua# 12 months@ 308
th
da,!
propert, .urnedA +hat is the insura.#e interest of mortgagorD Is it 1C30;D Interest rate of
mortgagor is /TI22 100%. /C decisions e"en counted num.er of da,s! wh, not one
,earD 2eap ,ear issues sti##.
7. Introduction
1. The offer
+hat constitutes an offer – sec 89
=, whom the offer is made –
The proposa# form (not in practice an,more*
The usua# contents of proposa# forms (e#ements of contracts*
Description of proposed assured
o Description of the ris&
o Description of circumstances affecting the ris&
o <re"ious histor, of the proposed assured
The ?uestions as&ed in "arious t,pes of insurance
2ife insurance – hea#th insurance! hea#th ?uestions for the histor,. C35/65T
I)<3T'5T
<ersona# accident insurance – motorc,c#ing! what t,peD acing is an e7c#usion.
)otorc,c#e for transportation purposes! e7c#usionD 's& insurance compan, if that is
e7c#uded@ Construing Emotorc,c#eF depends upon insurance comps.
Gire insurance
=urg#ar, insurance – presence of securit, guardD CCTHD 284hour operationD
)otor insurance
The effect of the proposa# form
/tatement ., =.I.'. and 2#o,d-s
/tatement of 2ife 3ffices- 'ssociation
9. The co"er note
ICo"er 5ote – not the insurance po#ic,! .ut co"ering =6G36 issuance of po#ic,. /hort
period of duration! then a rea# insurance po#ic, wi## .e issued.
/ec ;2 – 3"ernotes$ co"er note$ ma, .e e7tended within 00 da,s with appro"a# of
commissioner
The purpose of the co"er note
The form of the co"er note and its issue
The duration of the co"er note
The effect of the co"er note
The incorporation of the terms of the po#ic,
ep#acement of the co"er note ., a po#ic,
=ro&er-s co"er note
10. The acceptance (#ife insurance cases*
+hat constitutes an acceptance – >B TJ6 )3)65T TJ6 <6)IU) I/ <'ID
B"6T &"T%OD8 In writingA )emo to fi#e. )emorandums as .asis.
The methods of acceptance
+here the offer is made ., the proposer
+here the offer is made ., the insurers
The effect of acceptance
Discrimination
11. The princip#e of good faith
12. 5on4disc#osure – concea#ment (56>'TIH6 'CT* and misrepresentation /6C 21
The e7tent of the assured-s dut,
'ctua# &now#edge
<resumed &now#edge
Is the dut, of disc#osure an imp#ied termD
The tests of materia#it,
The test of the Kprudent insurer-
The Kreasona.#e assured- test
+hether the non4disc#osure wou#d inf#uence the particu#ar insurer is irre#e"ant
'ssured-s opinion as to whether the fact is materia# is irre#e"ant
Gifth eport of 2aw eform Committee
2aw commission-s proposa#
)ateria#it, is a ?uestion of fact
The time when materia#it, is to .e 9udged
The c#assification of materia# facts
Gacts norma##, materia#
Gacts not norma##, materia#
Gacts which need not .e disc#osed
Gacts within actua# or presumed &now#edge of insurer
Gacts within constructi"e &now#edge of insurer
Gacts as to which information is wai"ed
Gacts tending to #essen the ris&
Gacts the disc#osure of which is unnecessar, ., reason of a condition
Gacts re#ating to Kspent- con"ictions
/ome e7amp#es of materia# and immateria# facts
Gire insurance
=urg#ar, insurance
<ersona# accident insurance
>uarantee insurance
2ife insurance
)otor insurance
<roof of the materia#it, of facts not disc#osed
The duration of the dut, of disc#osure
The effect of non4disc#osure
13. &isrepresen)a)ion
)odification of the dut, ., contract
Luestion and answers
The effect of the ?uestions
The effect of the answers
+here there is a K.asis- c#ause
+here there is no K.asis- c#ause
The t,pes of inaccurac,
The interpretation of the ?uestions and answers
The statement must .e considered as a who#e
' fair and reasona.#e construction must .e adopted
The who#e truth must .e to#d
3ther information in the possession of the insurers
Inconsistent or unsatisfactor, answers
+here the space for the answer is #eft .#an&
The onus of proof
+hat must .e pro"ed
/ome e7amp#es of the e"idence re?uired
18. The premium
The amount of the premium
The pa,ment of the premium
)ode of pa,ment
Time for pa,ment
6ffect of pa,ment
<a,ment to the agent of the insurers
The authorit, to recei"e pa,ment
The form of pa,ment
ight to c#aim a return of premium
ight to a return of part of the premium
+here there is no right to a return of premium
III. T%" POLIC9
1;. Introduction
10. C#assification of po#icies
'ccording to the description of the su.9ect4matter
'ccording to the amount reco"era.#e
KUn"a#ued- po#icies
KHa#ued- po#icies
17. The form and contents of the po#ic,
Insurance companies- po#icies
The contents of the po#ic,
The heading
The .od, of the po#ic,
The .ac& of the po#ic,
The doc&et
2#o,d-s po#icies
The form of the po#ic,
The contents of the po#ic,
The premium
The #ia.i#it, of the underwriters
Conditions
The incorporation of other po#icies
11. The effect of other documents on the po#ic,
6ffect where the other document is not incorporated
6ffect where the other document is incorporated
2oo&ing at other documents to reso#"e am.iguities
19. <aro# e"idence in re#ation to the po#ic,
The genera# ru#e
67ceptions to the genera# ru#e
To pro"e that the po#ic, is "oid
To pro"e that the po#ic, does not contain the correct terms
To pro"e a paro# condition
To add co##atera# terms
To identif, the su.9ect4matter of insurance
To show that a word is used in a pecu#iar sense
The effect of the admission of paro# e"idence
20. The commencement and duration of the po#ic,
The commencement of the po#ic,
The duration of the po#ic,
Determination ., pa,ment
Determination ., consent
Determination ., assured
Determination ., statue
Determination ., .reach of condition
21. The cance##ation of the po#ic,
22. The a#teration of the po#ic,
)ethods of a#teration
The right of the insurer to a"oid the contract
23. The rectification of the po#ic,
6ffect of de#i"er, of po#ic, containing wrong terms
The ad"isa.i#it, of rectification
The methods of rectification
=, the act of the parties
=, an order of the court
28. The renewa# of the po#ic,
/tipu#ations as to renewa#
+here the po#ic, is renewa.#e ., mutua# consent
+here the po#ic, is renewa.#e at the option of the assured
+here .oth parties must renew the po#ic, in the a.sence of notice
The practice as to renewa#
/tatement ., =.I.'. and 2#o,d-s
The effect of renewa#
The situations to .e considered
/ome e7press terms as to whether renewa# is as new contract
Da,s of grace
The c#asses of stipu#ation
2;. 2apse and re"i"a# of po#ic,
20. The peri#s insured against in the po#ic,
27. The e7ceptions in the po#ic,
The "ariet, of e7ceptions used
The e7ceptions to .e found in most t,pes of po#ic,
The construction of e7ceptions
21. The conduct of the assured
5eg#igent acts
+i##fu# acts
67press stipu#ations in the po#ic,
29. The conditions of the po#ic,
The c#assification of conditions
Imp#ied and e7press conditions
67press conditions
C#assification of conditions with reference to time of operation
Conditions precedent to "a#idit, of the po#ic,
Conditions su.se?uent of the po#ic,
Conditions precedent to the #ia.i#it, of the insurers
+hat constitutes a condition
+hether persona# fu#fi##ment of the condition ., the assured is necessar,
=reach of condition
+hat constitutes a .reach
=urden of pro"ing a .reach
The effect of a .reach
The usua# effect
+here a particu#ar pena#t, is pro"ided
+ai"er of .reach of condition
+ai"er ., the insurersB what constitutes a wai"er
+ai"er of .reach a#read, committed
+ai"er of future performance of condition
+ai"er must .e p#eaded
+ai"er ., agent of insurers
/tatement ., =.I.'. and 2#o,d-s
30. The a#teration of the ris& under the po#ic,
The effect of an a#teration
+here the po#ic, ceases to app#,
+here the a#teration mere#, suspends the operation of the po#ic,
Imp#ied conditions as to ma&ing a#terations
+here the po#ic, contains an e7press condition against a#terations
+here there is no e7press condition against a#terations
67press conditions as to ma&ing a#terations
The t,pes of prohi.ition or restriction
Conditions prohi.iting a#terations a.so#ute#,
Conditions prohi.iting increase or ris&
Conditions prohi.iting a#terations without notice
Conditions prohi.iting increase of ris& without sanction
31. The assignment of the su.9ect4matter insured under the po#ic,
67press conditions against assignment
'ssignment ., operation of #aw
/a#e or gift of su.9ect4matter
Creation of a trust mortgage
Change in a partnership
32. 3ther insurance
67press conditions re#ating to Kother insurance-
+hat constitutes Kother insurance-
33. The assignment of the po#ic,
+hat constitutes a "a#id assignment
Consent of the insurers
Contemporaneit, of assignment of the po#ic, and the su.9ect4matter
The form of the assignment
'ssignment ., operation of #aw
The effect of the assignment of the po#ic,
38. The construction of the po#ic,
Construction and the doctrine of precedent
The principa# ru#es of construction
The intention of the parties must pre"ai#
The who#e of the po#ic, must .e #oo&ed at
The written words wi## .e gi"en more effect than the printed words
The grammatica# construction wi## .e adopted
The words are to .e construed in their ordinar, meaning
The meaning ma, .e #imited ., the conte7t
The words mean what the, sa,
The words must .e construed #i.era##,
' reasona.#e construction wi## .e preferred
The Kcontra proferentem- ru#e
The court wi## tr, to reconci#e the inconsistencies
67press terms o"erride imp#ied terms
/u.se?uent ascertainment of matters origina##, uncertain
The siMe of print in insurance po#icies
T%" CLAI&
3;. Introduction
30. The time of the #oss
5o e7press terms
67press terms
37. The doctrine of pro7imate cause
The meaning of Kpro7imate cause-
+as the #oss caused ., a peri# insured againstD
+here the #ast cause is the peri# insured against
+here the peri# insured against is not the #ast cause
+here there is no .rea& in the se?uence of causes
+here the se?uence of causes is interrupted
+here the causes are concurrent
+as the #oss caused ., an e7cepted causeD
+here the peri# insured against is preceded ., an e7cepted cause
+here the peri# insured against precedes an e7cepted cause
+here the #oss is caused ., the action of two concurrent and independent causes
)odification or e7c#usion of the doctrine of pro7imate cause
31. The ma&ing of a c#aim
5otice of #oss
The notice need not .e in writing
The notice need not .e gi"en ., the assured himse#f
The notice need not .e gi"en to the insurers persona##,
The notice shou#d .e gi"en within the prescri.ed time
<articu#ars of #oss
De#i"er, of the particu#ars of the #oss
/ufficient detai#s must .e gi"en
The particu#ars of the #oss
/ufficient detai#s must .e gi"en
The particu#ars shou#d .e de#i"ered within the prescri.ed time
The methods of pro"ing the #oss
Graudu#ent c#aims
The Insurance 3m.udsman =ureau
39. =urden of proof
<roof of #oss
3n whom the .urden #ies
Degree of proof re?uired
<roof that the #oss fa##s within an e7ception
3n whom the .urden #ies
The genera# ru#e
)odification ., the terms of the po#ic,
Degree of proof re?uired
+here the underta&ing of the insurer is ?ua#ified
The princip#es to .e app#ied
<romise with an e7ception
Lua#ified promise
T%" 6"TTL"&"NT O T%" CLAI&
80. Introduction
81. <a,ment of the #oss
The ca#cu#ation of the amount reco"era.#e
Ha#ued po#icies
Un"a#ued po#icies
/uccessi"e #osses
/imu#taneous #osses
2imitation on the amount reco"era.#e
Contri.ution c#ause
'"erage c#ause
67cess c#ause
C#ause specif,ing sma##er sum pa,a.#e
2imitation ., statute
Granchise c#auses
To whom pa,ment is to .e made
The form of pa,ment
The pa,ment of interest
<a,ment ., mista&e
)ista&e of #aw
)ista&e of fact
/ome e7amp#es of mista&es of fact
67ceptions to the genera# ru#e
67 gratia pa,ments
82. The app#ication of the proceeds of the po#ic,
The genera# ru#e
67ceptions to the genera# ru#e
ight conferred ., statute
Contract for the sa#e or e7change of propert,
)ortgage ., deed
<ropert, su.9ect to a trust or sett#ement
ight conferred ., contract
83. The assignment of the proceeds of the po#ic,
+here the #oss has a#read, ta&en p#ace
+here the #oss has not ,et ta&en p#ace
The form of the assignment
88. einstatement
einstatement ., the insurers
einstatement c#ause
Time within which e#ection is to .e made
The mode of e#ection
The effect of the e#ection
The duties of the assured
einstatement under the Gires <re"ention ()etropo#is* 'ct 1778
einstatement ., assured
Dut, imposed ., contract
Dut, imposed ., statute
8;. /u.rogation
The nature of su.rogation
The t,pes of po#icies to which su.rogation app#ies
The histor, of the doctrine
The princip#e of indemnit,
+hen su.rogation arises
The rights in respect of which su.rogation arises
ights arising out of tort
ights arising out of contract
ights under statue
ights o"er the su.9ect4matter
The e7ercise of the right of su.rogation
The duties of the assured
Dut, to gi"e assistance to the insurers
Dut, not to pre9udice the insurer-s position
The defences a"ai#a.#e to the part, sued
The effect of su.rogation
80. Indemnification a#iunde
Indemnification .efore pa,ment
Indemnification after pa,ment
The insurers- right to .enefit
The cases in which the right arises
+here the pa,ment is made ., a tortfeasor
+here the pa,ment is made under a contract
+here the pa,ment is made as a gift
87. Contri.ution
The meaning of contri.ution
+hen the right of contri.ution arises
/ame su.9ect4matter
/ame peri#
/ame assured
<o#icies in force
Ha#id and effecti"e contracts
Contri.ution not e7c#uded ., terms of po#icies
The enforcement of the right of contri.ution
The apportionment of the #oss
/pecific po#icies
+here the po#icies are concurrent
+here the po#icies are non4concurrent
+here the #oss affects the common propert, not co"ered ., .oth po#icies
'"erage po#icies
The two conditions of a"erage
The app#ication of the two a"erage conditions
The apportionment of the #oss
AG"NC9 IN IN6URANC" TRAN6ACTION6
81. Introduction
89. The re#ationship .etween the principa# and the agent
The rights of the agent
Commission
Indemnit,
2ien
The duties of the agent
Dut, to carr, out the transaction
Dut, to o.e, his instructions
Dut, to use proper s&i##
Dut, to account
Dut, to act honest#,
The conse?uences of a .reach of dut,
Gorfeiture of a## his rights
2ia.i#it, for a## #oss sustained
Dismissa#
Crimina# #ia.i#it,
;0. The re#ation .etween the principa# and third parties
The authorit, of the agent
The t,pes of authorit,
67press and imp#ied authorit,
Usua# authorit,
'pparent authorit,
The termination of the agent-s authorit,
+here the act of the agent
;1. The re#ation .etween the principa# and third parties
The authorit, of the agent
The t,pes of authorit,
67press and imp#ied authorit,
Usua# authorit,
'pparent authorit,
The termination of the agent-s authorit,
+here the act of the agent does not .ind the principa#
The effect of the agent-s fraud
atification
Conditions necessar, for a "a#id ratification
The effect of ratification
atification after #oss
)arine insurance
5on4marine insurance
Insurances ., persons interested
Insurances ., persons ha"ing no interest
+here the po#ic, co"ers persons other than the assured
Nnow#edge of the principa# or of the agent
Imputed &now#edge in genera#
<rincipa#-s &now#edge imputed to agent
'gent-s &now#edge imputed to principa#
Imputed &now#edge in insurance transactions
In re#ation to the assured and his agent
Dut, of disc#osure
Nnow#edge at other stages of the insurance
In re#ation to the insurers and their agent
Dut, of disc#osure
+here the proposa# form in fi##ed in ., the agent and third parties
;2. The re#ationship .etween the agent and third parties
ights and #ia.i#ities under the contract
+here he acts for a named or unnamed principa#
+here he acts for an undisc#osed principa#
2ia.i#it, for .reach of warrant, of authorit,
2ia.i#it, in tort
&I6C"LLAN"OU6
;3. Conf#ict of #aws
The 9urisdiction of the 6ng#ish courts
The Kproper #aw- of the contract
+here there is an e7press pro"ision in the po#ic,
+here there is no pro"ision in the contract
The Kpresumptions-
The p#ace where the contract is made
Contracts made through agents
The p#ace of pa,ment
The form in which the po#ic, is framed
Terms "a#id in one countr, on#,
Immateria#it, of #oca#it, of su.9ect4matter
+hen the #aw of 6ng#and must a#wa,s .e app#ied
'ssignment
;8. The effect of war upon the contract
;;. The protection of po#ic, ho#ders
The <o#ic,ho#ders- <rotection =oard
Constitution
'ppointment and tenure of mem.ers
emuneration and compensation
<owers and procedure
<erformance of functions
Instruments and contracts
'ccounts! audit and annua# report
>uidance ., the /ecretar, of /tate
The genera# scope of the =oard-s function
The =oard-s duties in case of companies in #i?uidation
Compu#sor, insurance
Third4part, ris& against insurance companies in road traffic cases
>enera# po#icies other than insurance po#icies
2imits on the =oard-s duties
2ong term po#icies
Guture .enefits under #ong term .usiness
Disproportionate .enefits under #ong term po#icies
>enera# pro"isions with respect to =oard-s duties
<erformance of duties
67c#usion and modification of =oard-s duties
The =oard-s powers to assist po#ic,ho#ders of companies in #i?uidation
The =oard-s powers to protect po#ic,ho#ders of companies in financia# difficu#ties
Transfer of .usiness etc.
2ong term .usiness
2e"ies on intermediaries
'ccounta.#e intermediar,
Income #ia.#e to #e",
67empt income #e",
estriction on the imposition of the #e",
ate of the #e",
/tatement for the purposes of s 20
Dec#aration and enforcement of the #e",
Distri.ution of e7cess proceeds of #e",
2e"ies on authoriMed insurance companies
5et premium income
'pp#ication of proceeds
estriction on the imposition of the #e"ies
/tatements of premium income
Dec#aration and enforcement of #e"ies
)isce##aneous
<ro"isions for persons insured under contracts of insurance and e"idenced .,
po#icies
'pp#ication of genera# receipts ., the =oard
'pp#ication of surp#us funds ., the =oard
3"ersea companies
Disc#osure of documents and information to the =oard
/tatement ., the /ecretar, of /tate in respect of the e7ercise of his powers
eport ., /ecretar, of /tate with to the operation of the 'ct
egu#ations