insurancebasic-Ali.ppt
- 3. Insurance is a protection against financial loss arising on the happening of an unexpected event. Insurance companies collect premiums to provide for this protection. A loss is paid out of the premiums collected from the insuring public. Insurance Companies act as trustees to the amount collected
- 4. 4 Insurance is a contract between 2 parties. On party called the insurer who undertakes for a fixed amount called premium . To pay the other party called the insured a fixed amount of money on the happening of an certain event .
- 5. Fundamental Principles of Insurance Utmost good faith Insurable interest Indemnity Subrogation Contribution Proximate cause
- 6. Utmost Good Faith Insured has a legal duty to disclose all information about the proposed contract of insurance to the insurers whether such information is requested or not.
- 7. Utmost Good Faith Insured has a legal duty to disclose all information about the proposed contract of insurance to the insurers whether such information is requested or not. Fire Insurance – Construction, Occupancy, Stock – nature of goods Motor Insurance – Cubic Capacity , year of manufacture, tonnage, purpose etc.
- 8. It constitutes the legal rights to insure arising out of a financial relationship, recognized as law between the insured and the subject matter of insurance Ownership of property Ownership of property Our own life Insurable Interest
- 9. Fnancial compensation sufficient to place the insured in the same financial position after a loss as he enjoyed Repair Reinstatement Replacement Money Transfer Indemnity
- 10. Subrogation This is defined as the transfer of rights and remedies of the insured to the insurer who has indemnified the insured in respect of the loss Letter of subrogation Ex : Vehicle theft claim
- 11. Contribution An insured may have several insurances on the same subject matter. If he recovers his loss under all these insurances, he will obviously make a profit out of the loss. The right of insurers who have paid a loss under a policy to recover a proportionate amount from other insurers who are liable for the same loss. The common law principle allows the insured to recover his full loss within the sum insured from any insurers he likes.
- 12. Proximate Cause It means the active efficient cause that sets in motion a train of events which brings about a result, without the intervention of any force started and working actively from a new and independent source. A person insured under personal accident policy went out hunting and met with an accident. Due to shock and weakness he was unable to walk. From the wet ground he contracted cold which developed into pneumonia which caused his death. The proximate cause of death was the original accident and pneumonia is only a remote cause and hence the claim is payable.