Professional Documents
Culture Documents
Presented to
Ms Samia Sultana Tani Assistant Professor Department of Finance University of Dhaka.
Presented By
Our objectives
To discuss the principle of insurance. To know about the different terms of the insurance. To get an overview on the principle of Utmost good faith and Insurable interest. To discuss the different related and unrelated facts that should be enclosed.
Our Agenda
Principles of utmost good faith
warranties
Representation
Ananya Nandy
ID-16-139
ID-16-021
Principles Of Insurance
If there is any breach of duty the aggrieved party (suffered party) can reject the contract at the option of the voidable contract .
The duty of disclosure must be observed throughout the negotiations and continues until the completion of the contract. For general insurance contracts, the duty revives at renewal if it is a fresh contract & it completed on acceptance of risk by the insurer. In life insurance contracts, the duty of disclosure does not apply afresh for long-term agreement &completed with the payment of premiun.
Facts suggested some special motive behind insurance e.g. excessive or gross over insurance. Facts suggested the abnormality of the proposer himself e.g. making frequent claims. Facts explaining the exceptional nature of the risk.
representation
warranties
Distinction
Representation
warranties
Required to be Strictly and literally substantially true complied with. (material portion literally true & immaterial portion need not) If & only if the misrepresentation relates to the material facts, insurer can avoid the contract. Does not appear in the policy. Any material and immaterial breach is enough to avoid the contract. Must appear expressly or by way of reference.
Avoid contract
Omission to disclose a material fact inadvertently (unintentionally) or because he innocently thought the information to be immaterial.
Concealmen t
misrepresent ation
Innocent
Making an inaccurate or false statement pertaining to material facts innocently and believing it to be true. Making a false statement pertaining to facts material to the risk, intentionally and with the intention to deceive the insurer.
misrepresen tation
Fraudulent
Types of contract
Void contracts: Void contracts are those which are not contracts at all. They cant be bought in the court of Law for any action. For example: gaming and wagering (gamble). A void contract is not necessarily an illegal contract. It should be remembered that all illegal contracts are void, but all void contracts are not illegal. Voidable contracts Voidable contract are those where minor breaches exist, such as breach of the duty of utmost good faith. That is breach of any duty which is minor in nature. In case of voidable contract, the aggrieved party can decide whether the contract will remain valid or not. It remains valid until it is declared void.
Unenforceable contracts
Unenforceable contract
-Unenforceable contracts are those which are very much valid contract, but simply cant be enforced in a court of Law because of absence of some legal requirement or evidential features. For example, Stamp Act requires that insurance policy are to be appropriately stamped.
There must be a property, rights, interest, life or limb or potential liability devolving upon the insured capable of being covered
Such property, rights, interest, life , limb or liability must be the subject matter of the insurance.
In insured must bear some relationship, recognized by law, to the subject matter whereby he benefits by the safety of the property, rights, interest, life or limb or freedom from liability and is prejudiced by any loss, damage or injury or creation of liability.
Owners: have got to the extent of full value. Part or joint owners: to the extent of their or financial interest. Mortgagee or mortgagor: interest of the mortgagee is limited to the sum of money that he has advanced. Bailees: A bailee is one who has potential liability being created if goods belonging to the others get lost or damaged in their custody. Example. Warehouseman.
Carriers: Like bailees, carrier has potential liability for any mishap to the goods belonging to others whilst in their custody. Administrator, executors & Trustees: Responsibility put on them by law. Life: A husband has an insurable interest in his wifes property as he is legally entitled to share her enjoyment of it and a wife similarly has an insurable interest in her husbands property as their relationship is reciprocal.
Debtor and creditor A creditor has an insurable interest in the life of a debtor, to the extent of the debt at the time when the insurance is effected. Insurers: A potential liability undertaken from insured under a policy and justifies taking out a reinsurance policy.
In accident insurance Both at the time of claim and effecting the policy like fire insurance.
Conclusion
Thats the full overview of the principles of Utmost good faith and insurable interest. This will help us to understand the learning on the insurance in a more specific way. We think that will be very much beneficial in our future.
ANY QUERIES