Q. Discuss the
nature of Insurance Contract. Explain the essential ingredients of a valid
Insurance Contract?
Ans. Nature of Insurance :-
Hindu
philosophy gives the axiomatic truth of the nature of insurance ‘YatBhavathi tat nasyathi’ which means
whatever is created will be destroyed.
Risk is
inevitable in life.
Business is
a course of life, so in life and business there lie a variety of risks. Risk is
closely connected with ownership. The owner want to save themselves from risk
and out of this desire the business of insurance born.
Ø The
nature of insurance depends upon the nature of the risk sought to be protected.
The
chief variety of contract are :-
1.
Life
2.
Fire
3.
Marine
In modern time third party insurance .
v
-The death of an individual is a
certain event but the certainty lies in the time when it happens.
v
The fundamental function of
insurance is to shift the loss suffered by a sole individual to a willing and
capable professional risk bearer.
Ø Thus
the institution of insurance serve a two fold purpose.:-
ü
The immediate and direct object is
to protect the individual assured form any loss or damages to his life or
property by distributing the loss among a large number of persons through the
media of the professional risk bearers, the insurers, thus serving also the
sociological purpose.
ü
The far sighted and long-range
purpose is to accelerate the economic growth of the nation.
Essential ingredient of a valid Insurance Contract.
a.
An
agreement
Section
2(h) of contract Act.:- Agreement enforceable by law is contract.
LIC
VsKamalvathi 1984(2)SCC 719 a
cheque for the premium is sent and the money is received and
retained till after the death of the insured.
b.
Competency
of Parties
Compentency
of the Insured.
Mohoribibi
vs. Dharmo Das Ghose.
In
India , a Contract by a minor is not
merely voidable but is altogether void.
Chandulal
v/s IT commissioner
Supreme
court held that in such cases in substance the contract of insurance between
child father and the LIC is a contract of life insurance. With regard to the
life of the child who is the insured, and the clauses in the policy regarding
return of premiums to the proposer are merely ancillary or subordinate to the
main purpose. The idea of the policy is to introduce the child into the insurance
habit.
Coparcener
in a Hindu Joint Family
c.
Free
Consent
Two
positive element & 3 negative elements
Sec.
14 of contract :- Consent is not free when it is obtained by
i.
Coercion
ii.
Undue influence
iii.
Fraud
iv.
Misrepresentation
v.
Or mistake.
d.
Indeminity:-
Every contract of insurance, except life assurance, is a contract of
indeminity.
e.
Duty
of Disclosure
f.
Uberrima
Fides
(Utmost
Good Faith)
g.
Policy---Cover
note
h.
Insurable
Interest
i.
Contractual
relationship
