@#. What is insurance contract? Discuss about element of contract.
Ans: Insurance contract: Insurance may be defined as a contract between two parties whereby one party called insurer undertakes, in exchange for a fixed sum called premium to pay the other party called insured a fixed amount of money on the happening of a certain event.
Elements of contract: - The insurance contract involve
a) The elements of general contract
b) The elements of special contract relating to insurance.
These are discussing below: -
A. General contract: - The valid contract according to act 1872 must have the following essentialities :
1. Offer and acceptance. 2. Legal consideration
3. Competent to make contract. 4. Free consent.
5. Legal object.
B. Special contract: - Special contract relating to the essentialities are : -
1. Insurable interest 2. Utmost good faith
3. Principle of indemnity 4. Doctrine of Subrogation
5. Warranties 6. Transfer of interest or Assignment
7. Return of premium 8. Proximate cause
@#: Define life insurance
Ans: Life insurance contract may be defined as a contract, whereby the insurer in consideration of a premium undertakes to pay a certain sum of money either on the death of the insured or on the expiry of a fixed period. Since, the life insurance contract is not an indemnity contract, the undertaking on the part of the insurer in an absolute one to pay a definite sum of maturity of policy at the death or an amount in installment for a fixed period or during the life.
@#. Different types of life insurance police. [Syllabus Item] Ans: The life insurance policies can be divided on the basis of –
1. Policies according to duration of policies: The life insurance policies according the duration may be –
a) Whole life polices b) Term insurance policies
c) Endowment insurance policies d) Survivorship insurance policies
2. Policies according to premium payment: The policies according to the premium payment may be of the following type –
a. Single premium policy: In this policy the whole premium is paid at the beginning of the policy.
b. Level premium policy: Under this policy regular and equal premiums are paid at a definite interval.
3. Policies according to participation in profits: Policies according to participation in profits may be –
a. Without profit policies or non - participating policies: The holders of without profit polices are entitled to share the profits of the insurer.
b. With profit policies or participating policies: The holders of with profits policies are entitled to share the profit of the insurer.
4. Policies according to the number of persons insured: On the basis of number of person insured in a policy the policy may be –
a. Single life policies: Under single life policies, only one individual is insured.
b. Multiple life policies: In this policy more than one life is insured. It may be joint life policy and last survivor policy.
5. Policies according to the method of payment of policy amount: The policy amount may be paid in –
a. Lump Sum policies: Where the sum assured in paid in lump sum at the events insured against.
b. Installment or Annuity policies: Under this policy the policy amount is payable in installments.
6. Non conventional policies: Life insurance Corporation as introduced several non conventional policies to meet the requirements of the populations.
@#. Essential features of life insurance contract.
Ans: Features of life insurance contract given below –
1. Nature of general contract: Includes
A. Agreement [offer and acceptance] B. Competency of the parties.
C. Free consent of the parties. D. Legal consideration
E. Legal objective
2. Insurable Interest: Insurable Interest is the pecuniary interest. The insured must have an Insurable Interest in the life to be insured for a valid contract. Insurable Interest in life insurance maybe divided into two categories –
A. Insurable Interest in own life B. Insurable Interest in others life
3. Utmost Good Faith: The life insurance requires that the principle of utmost good faith should be preserved by both parties.
4. Warranties: Warranties are an integral part of the contract. These are the bases of the contract between the proposer and insurer.
5. Proximate cause: The efficient or effective cause which causes the loss is called proximate cause. It is the real and actual cause of loss.
6. Assignment and Nomination: The policy in life insurance can be assigned freely for a legal consideration. The assignment shall be complete and effectual of the execution of such endorsement either on the policy itself or by a separate deed.
7. Return of premium: Ordinary premium once paid can not be refunded. Refunded is allowed with –
a) By agreement in the policy b) For reasons of equity.
8. Other features: Life insurance policies have the following additional features –
A. Aleatory Contract B. Unilateral Contract F. Indemnity contract is not applied
C. Conditional Contract D. Contract of Adhesion
@#: Distinguish between life insurance and other types of insurance.
Life insurance Other types of insurance
1.Variance in premium In life insurance premium is not much variable. In other insurance premium is much variable in numerous forms.
2.Classification of risk Life insurance is simpler. It would be standard, sub – standard and uninsurable. Other insurance is not simple. It would be several.
3.Period of insurance Generally the life insurance is taken for longer period. Other forms of insurance are taken for not more than one or two years.
4.Protection and investment The life insurance contract provides protection against loss on early death and investment to meet the old age requirement. Other forms of insurance provides only protection against loss on damage of the property against the insured perils and do not provide investment.
5.Mode of premium payment Level premium Single premium
6.Insurable interest Must be at the time of proposal Must be present at the time of loss
@#. Discuss about the life insurance policy condition.
Ans: The policy condition studying with five types of forms-
A. Condition relating to commencement of risk: -
1. Commencement of risk: The letter of commencement not a cover note it only familiar that risk will commence when the first premium is offered and accepted by insurance. The policy condition and is a document which can be used as a proof of risk.
2. Proof of age: The proof of age must be produced at the time of proposal because the rate of premium depends of life insured.
B. Condition of premium:
1. Payment of premium: The premium rate is calculated annually but for the suitableness of the insured it can be paid half yearly, quarterly, and even monthly.
2. Days of grace: The premium is paid at or before the due date. But for the suitableness of the policy holder in certain additional period is called day of grace which is allowed to pay premium.
3. Premium notice: Before payment of each premium insurance company send premium notice to insured to remember premium date.
C. Conditions relating to the continue policies:
1. Indisputable clause 2. Alteration in policies 3. Exclusion
4. Lost policy 5. Loans 6. Nomination
7. Assignment 8. Suicide 9. Double accident benefit
10. Disability benefit 11. Extended Disability benefit
D. Lapse condition:
1. Lapse of policies: If the insured is fail to pay a due premium with in a day of grace for this region his policy is in terminated in this condition the insurer provide certain help to the insured of the time of lapsation.
2. Revival of lapsed policies: If a policy lapses by non payment of premium with in the days of grace it may be revived to the fully policy amount at any time during the life time of the life assured.
3. Special revival scheme: Under special revived scheme the date of commencement of policy will be fixed by dating back the policy.
4. Surrender value: When the assured is unable to revive his policy he can surrender his policy and he can get cash surrender value.
5. Extended term insurance: For the unpaid of due premium the maturity period of policy is increase.
6. Automatic premium loan: the assured may use the option of automatic premium loan before the maturity of the policy.
7. Reduced paid – up insurance: When the policy holder is unable to pay further premiums and does not want cash immediately he can paid up the policy. The sum assured under the policy is reduced in the same proportion as the amount of premiums paid bears to the total premiums payable.
E. Claim condition:
1. Settlement of claims: The policy amount become payable either on the insured death during the term of insurance or his surviving till end of maturity.
2. Settlement Options: The claim amount in cash and installment bases.
@#.What is Fire insurance? State the importance of fire insurance.
Ans: Fire insurance may be defined as a contract between the insurance and a potential fire insurance policy taker. Fire insurance is an insurance against loss due to fire. In the term of fire insurance the insurer compensation the loss or damage or specific property and insured can side ration insurance premium for specific property.
Importance of Fire insurance: Some importance’s have the fire insurance these are –
1. Fire insurance provides safe guard to the personal property against the causes of fire.
2. Fire insurance help in industrialization by protecting of fire losses.
3. Fire insurance provides security and relief of the people against the fire losses.
4. Fire insurance accumulation of resources and its investment.
5. Fire insurance is the creation of awareness in to the Fire insurance policy holder.
6. Fire insurance creating employment in the insurance business.
Fire insurance distribute the risk in to the society for reduce the fire burden.
@#. Discuss about the function of fire insurance?
1. The fire insurance provides certainty and security against fire losses.
2. Fire insurance preventing fire loses.
3. Fire insurance distribute fire risk to the any person and reducing the risk border.
4. Fire insurance research and analysis the fire risk and apply the result into the practical field.
5. Fire insurance creates economic development in the country.
6. Fire insurance accumulate capital or capital formation and investment it money protect.
7. Fire insurance creates employment in the insurance business.
8. Fire insurance creates mental satisfaction on the insured person.
@#. Briefly explain the features of the fire insurance /elements of contract. Ans: In a Fire insurance contract some essential elements are very important these are –
1. General contract: General contract is an important element in the fire insurance. Without any contract the insurer and insured can not obtain any benefit. The general contracts includes-proposal, acceptance, commencement of risk
2. Contract of indemnity: Contract on indemnity another important element of the fire insurance. Without indemnity the fire insurance contract is valueless object. The contract of indemnity protects the insured person for the causes of fire losses.
3. Insurable interest: Insurable interest will be there where the subject – matter should be in such a position that the insured may suffer loss at the time of damage and may gain by its protection. The insurable interest in fire insurance must be present at the time of contract and at the time loss.
4. Proximate causes: The rule is that the immediate and not the remote cause are to be regarded – cause proximate non remotes spectator.
5. Subrogation: Subrogation means the right of one person to stand in the place of another and to avail himself of the latter’s rights and remedies.
6. Utmost good faith: The contract of fire insurance is one in which the observance of the utmost good faith – uberrimafides by both the parties are of vital significant.
7. Warranties: Warranties is that by which the assured undertakes that some particular thing shall or shall not be done, or that some conditions shall be fulfilled or whereby he affirms or negatives the existence of a particular state of facts.
@#. Discuss different fire insurance policies.
Ans: There are different types of fire policy. They are given below –
1. Valued policy: The value of property to be insured is determined of the inception (m~ÎcvZ) of the policy. In this case the insurer pays the total admitted value of the market value of the properties.
2. Valuable policy: The valuable policy is that policy where a claim amount is determined upon the market price of the damage property.
3. Specific policy: In specific policy where specific some is insured upon the market price at the damage property in case of specific period.
4. Floating policy: Under this policy a policy holder take insurance policy of any goods with in a policy contract.
5. Average policy: This policy containing average clause is called an average policy.
6. Excess policy: Sometimes the stock of business man may fluctuate from time to time. In this case he may be unable to take one policy or specific policy. If he takes policy for higher amount he has to pay higher amount of premium on the other hand if he take policy for lower amount he will have to bear proportionate amount of loss. In this condition he will take two policy first – loss and second – excess policy.
7. Declaration policy: The grate advantage of this policy is that the premium is limited to the actual amount at risk respective of the some insured.
8. Adjustable policy: This policy is nothing but an ordinary policy in the stock of business man with liberty to the insured to very at his opinion; the premium is adjustable pro – rate according to the variation of stock.
9. Maximum value with the discount policy: Under this policy no declaration or adjustment of policy is required, but the policy is taken for a maximum amount and paid full premium is paid thereon.
10. Reinstatement policy: This policy is insured avoid the conflict of indemnity.
11. Comprehensive policy: This policy undertakes full protection not only against the risk of fire but combining with in the risk against burglary, riot, civil commotion, theft, damage form pest, and lightning.
12. Consequential loss policy: The consequential loss policy includes the loss of tangible and intangible properties. This policy provides an indemnity to the insured for loss of net profits, payment of standing charges and expenditure in respect of increased cost of working.
13. Sprinkler leakage policy: This policy insures destruction of or damage to by water accidentally discharged or leaking form automatic sprinkler installation in the insured premises.
@#. Discuss about the fire insurance policy condition.
Ans: Fire insurance policy has two type of condition. They are given below –
A. Implied condition: The implied conditions of fire insurance are discuss below –
1) Existence of property 2) Insured property
3) Insurable interest 4) Good faith
5) Identity
B. Express condition: The express condition of fire insurance are shown in below –
1) Misdescription 2) Alteration 3) Exclusions
4) Fraud 5) Reinstatement clause 6) Insurer right after a fire
7) Loss procedure 8) Claim 9) Subrogation
10) Warranties 11) Purchasers interest clause 12) Contribution and average
@#. Explain the causes of fire. \ Discuss the classification of fire hazard.
Ans: Fire may causes in two types of way. They are discussed below –
1. Physical hazard: It refers to the inherent risk of fire in the property which may occur due to inflammable nature, construction, artificial lighting, heating, or lack of extinguishing (wbev©cK e¨w³) apparatus use to the property etc.
2. Moral hazard: Moral hazard depends on man property. Property may be set on fire by the owner or by any person with his willingness, carelessness, and lack of sense of duty may also increase fire waste.
@#. Mention the way of prevention of fire loss.
Ans: Insurance is meant for indemnification of loss and not for prevention of loss although every reasonable set can be taken to eliminate it and minimize it through agencies engaged to prevention of loss. Insurance may prevent loss in two ways –
A. Indemnification efforts: According to doctrine of Indemnification the financial loss suffered by perils insured against will be compensated full not more than this or not less than this. In true sense of Indemnification the insured is not entitled to make profit on his losses. In this way insurance provide protection against financial of insured.
B. Preventive efforts: The loss can not be prevent by insurance by the insurer provide help those who are engaged in preventive efforts by granting financials and other assistance. Insurance preventive efforts can be divided in two way –
a) Private activities: Private activities are those which include property owner are engaged to prevent loss. Insurance give advice of financial help to property owner on the following factors.
1. Construction 2. Fire services
3. Occupation 4. Management
5. Exposure
b) Public activities: Fire insurance provide numerous important service to reduce fire waste with the help of public institution which are engaged in fire fighting activities –
1. Community surveys 2. Standard schedule for grating cities
3. Under writes laboratories 4. Equipment
5. Salvage corps And salvage works by fire departments 6. Legislation and regulation
7. General devices
@#. Discuss the procedure of settlement of fire insurance claims.
Ans: In the fire losses are occurred the insured person claim to the insurance company to recover that losses. The insure person take some steps or procedure these are –
A. Steps to be taken by insured/policy holder-
1. Giving information: After fire losses the policy holder give information to the insurance company and request to take essential steps for recover the losses. The policy holder submit the notice the fire losses.
2. Submission of claim letter: After giving information the policy holder submit the claim letter to the insurance company with certain time. This certain time may be 30 days or selected period of the insurance company. Other necessary important instrument are –
a) Total property value, which properties are losses by the fire.
b) Necessary and authentic information about the fire losses which is the instrument of the lawful claim.
c) Inspection report of the policy.
B. Steps to be taken by insurer –
1. Confirming the validity of claim.
2. Enquiring regarding payment of premium.
3. Enquiry of damage
@#. Define Marine insurance.
Ans: Marine insurance has been defined as a contract between insurers and insured whereby the insurer undertakes to indemnify the insured in a manner to the interest thereby agreed, against marine losses incident to marine adventure. Classification of marine insurance are hull insurance, cargo insurance, freight insurance, liability insurance.
@#. Marine insurance policies.
Ans: Different classes of policies are used in marine insurance –
1. Voyage policies: The policy is issued to cover a particular voyage from one port to another and from one place to another. The policy is used mostly in case of cargo insurance.
2. Time policies: Under this policy the subject matter is insured for a definite period of time. The policy is generally taken for one year and used for hull insurance then for the cargo insurance.
3. Voyage and time policy or mixed policies: In this policy. The elements of voyage policy and of time policy are combined in under this policy.
4. Valued policies: Under this policy the value of loss to be compensated is fixed and remains constant throughout the risk except where is fraud and excessive over – valuation. The value of the subject matter is agreed between the insurer and the assured at the time of taking the insurance. It is also called insured value or agreed value.
5. Unvalued policies: When the value of policy is not determined at the time of commencement of risk but is left to be valued when the loss takes place. The value thus left to be decided later on is called the insurable value or unvalued or valuable policy.
6. Floating policies: This policy describes the general terms and leaves the amount of each shipment and other particulars to be declared later on.
7. Blanket policies: The policy is taken to cover losses within the particular time and place. The policy is taken for certain amount and premium is paid on the whole of it in the beginning of the policy and is re – adjusted at the end of the policy according to the actual amount at risk.
8. Named policies: Under this policy the name of ship and the amount of insured cargo are mentioned.
9. Single vessel and Fleet policies: A ship or a fleet of ships is insured in single policy.
10. Block policies: This policy insures incidental inland risks, too, along with the marine perils. For example, cotton is insured from the time of processing to the time when it was delivered at the point of destination.
11. Currency policies: Policies issued in foreign currency is called currency policy.
12. P.P.I. policies: ‘Policy Proof of Interest’ or P.P.I. policy base don mutual understanding, so it is called honored policies.
@#. Marine insurance policy conditions.
Ans: The old form of policy is even used today. The conditions are inserted in the policy in the form of clauses. The clauses took the standard with special meanings. They may be pertaining to Hull, Cargo and Freight.
1. Hull clauses: These clauses are mainly framed with the insurances on vessels and are incorporated in hull policies. These clauses are known as “Institute Time Clauses”.
2. Cargo clauses: These clauses are used in the insurance of goods and are incorporated in cargo policies. The clauses described the nature, extent and scope of the insurance and define comprehensive conditions and restrictions. This clause is known as “Institute Cargo Clause”.
3. Freight clauses: The clauses are framed in connection with the loss of freight due to maritime perils which may be insured for a period or for a voyage. The clauses are known as “Institute Freight Clause”.
@#. State the essential features of marine insurance.
Ans: The marine insurance has the following essential features which are also called fundamental principles of marine insurance –
9. Features of general contract: Features of general contract includes –
a) Proposal
b) Acceptance
c) Consideration
d) Issue of policy
10. Insurable interest: An insured person will have insurable interest in the subject matter where he stands in any legal or equitable relation to the subject matter in such a way that he may benefit by the safety or due arrival of insurable property or may be prejudiced by its loss, or damage thereto or by the detention thereof or may incur in respect thereof.
11. Utmost good faith: The important principle ‘Utmost good faith’ which applies to all forms of insurance. Both parties of the insurance contract must be of the same mind at the time of contract.
12. Doctrine of indemnity: The contract of marine insurance is indemnity. Under no circumstances an insured is allowed to make profit out of a claim. In the absence of the principle of indemnity, it was possible to make a profit.
13. Doctrine of subrogation: The aim of doctrine of subrogation is that the insured should not get more than the actual loss or damage. After payment of the loss, the insurer gets the right to receive compensation or any sum forms the third party from whom the assured is legally liable to get the amount of compensation.
14. Warranties: Warranties are the statement according to which insured person promises to do or not to do a particular or to fulfill or no to fulfill a certain condition. It is not merely a condition but a statement of fact. Warranties are two types –
a. Express warranties
b. Implied warranties
15. Proximate cause: The efficient cause of a loss is called the proximate cause of the loss.
16. Assignment: A marine assignable unless it contains terms expressly prohibiting assignment.
17. Return of premium: Ordinary premium once paid can not be refunded. Refunded is allowed with –
c) By agreement in the policy d) For reasons of equity.
#. What is a marine peril? Show the types of marine insurance losses. Ans: Marine perils: Marine perils means the perils consequence on or incidental to the navigation of the sea, fire, man of war, enemies, pirates, rovers, and thieves.
Losses in marine insurance business are result of the various perils -
1. Perils of sea: Perils of sea refers to fortuitous (AvKw¯§K) accident or casualties of the sea. If the loss is arising out of any peril of sea insured is attribute for compensation.
2. Fire perils: In older time fire was the biggest maritime perils. But recently it has been under control to a great extant. Any damage of goods resulting from fire and smoke is included under fire perils.
3. Man of war: Any damage of good and ship is arising out of condition against a man of war is insurable.
4. Enemies: The ship is belonging by enemy and it may caused any loss of the insured and is re – underwrite by marine policy.
5. Pirates, rover, and thieves: The perils of account to pirates, rover, and thieves were commonly in older times but it has been reduced considerably this day.
6. Jettison: Jettison means voluntary throwing away of the goods and cargo or part of the vessel equipment for lightening the ship for common safety.
7. Barratry: Barratry every wrongful act with fully committed by master.
8. Restraints: The prevention to use of a part of government of a country is called restraints (evav, `gb, mshg).
9. The free capture and seizure clause: This policy covers war perils.
10. Explosion: The explosion on board of the vessel May causes damage of hull or cargo or both could constructed as perils of sea.
11. Other perils: Loss also occurred by salt water of sea collision with rock with timber damage due to oil sweat etc.
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