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.

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CONTRACT OF INSURANCECONTRACT OF INSURANCE

In between the insured and insurer In between the insured and insurer

INSURED:-INSURED:- Party effecting insurance,Party effecting insurance,

(Individual, Company, Firm,(Individual, Company, Firm,

Corporate body etc., with Corporate body etc., with legal status)legal status)

INSURER:-INSURER:- Party granting the protection Party granting the protection under an insurance policy.under an insurance policy.

Policy:- Policy:- Is the evidence of contractIs the evidence of contract

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1. Rate of contribution or premium

2. The degree of hazard it is exposed to.

3. Classification of various types of properties.

PRINCIPLES OF INSURANCE

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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 FaithInsurable InterestIndemnity

• 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:SCOPE OF INSURANCE:

General Insurance is divided into three General Insurance is divided into three categories:categories:

FIRE, FIRE,

MARINE MARINE

& &

MISCELLANEOUS 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: MARINE INSURANCE BUSINESS: This is the oldest branch of Insurance comprising This is the oldest branch of Insurance comprising HULL & CARGO. HULL & CARGO.

Hull Insurance deals the Loss associated with Hull Insurance deals the Loss associated with floating crafts, Cargo insurance provides cover floating crafts, Cargo insurance provides cover in respect of loss or damage to goods during in respect of loss or damage to goods during transit by rail, road, sea or air.transit by rail, road, sea or air.

MISCELLENOUS INSURANCE BUSINESS: MISCELLENOUS INSURANCE BUSINESS:

Mainly includes the motor business, accident, Mainly includes the motor business, accident, aviation , engineering and guarantee insurances. aviation , engineering and guarantee insurances.