The insurance contract is an agreement whereby one party( insurer) in

return for a consideration (premium), undertakes to pay to another party

(the insured) a sum of money.

The specific elements of the insurance contract are:

i. Offer and acceptance

ii. Consideration

iii. Legality and being capable of performance

iv. Agreement. (consensus ad idem)

v. Contractual capacity

vi. Intention to create legal relation ship

vii. No intention to commit fraud

Failure on the insured part to reveal all material facts may make

the policy void from inception. However to activate such

avoidance of liability on grounds of non-discloser, the onus is on

the insurer to prove that:

 Undisclosed facts were material

 Facts were within the actual or presumed knowledge of

insured

 Facts were not communicated to the insurer

Contra proferentum rule : this rule (which effectively says against the

offering party) states that there contractual language is capable of two

alternative interpretations, it will be construed against the insurer who

drafted the contract

and in favour of the insured, who accepts the wording. This is because the

insurer will have chosen the language used and should not be able to

benefit from any ambiguity contained within it.

An insurance contract is a legal document and has all the elements of a

valid contract.

An insurance proposal form includes general questions, insurance related

questions and specific question word

Claim forms are used for both; obtaining claims information and building

database for analysis.

Contractual term for premium is consideration.

The operative clause is also known as insuring clause.

Fraud is a condition subsequent

The written word takes precedent over the printed word

A. HEADING: includes logo, address, together with contact details, ph

number and website.

B. PREAMBLE: it consists of 4 main points:

i. The proposal form and any questionnaire are part of contract

and are incorporated by the reference within it.

ii. The sum insured

iii. The premium mentioned

iv. About cover

C. OPERATIVE CLAUSE: key part of the policy, where the actual

cover provided is outlined. It is also called insuring clause and

include the phrase “ the company will”…..

D. POLICY SCHEDULE:

The schedule is the part of policy document that is specific/unique to

each insured person, who has brought the policy.

E. SIGNATURES: under the preamble or to close will be printed the

signatures of an authorized official of the company.

F. EXCEPTION: under this section what the insurer will not pay for

the policy does not cover. Whilst ideally the policy holder would like

a policy that covers all eventualities,

G. CONDITIONS:
i. Terms: the insured must comply with the terms of the policy.

ii. Alteration to the risk: the insured must notify the insurer

should be a change to the risk.

iii. Claims procedure: this will vary from cover to cover.

iv. Fraud: the benefit of the poolicywill be forfeited should it be

discovered that the claim is in anyway fraudulent.

v. Reasonable care: the insured is to take the reasonable care to

to prevent/minimise loss.

vi. Contribution: applies if the other policies are in force,

covering the same loss.

vii. Cancellation: will outline the terms to beapplied and

procedures to be followed, should the company choose to

exercise its rights to cancel the policy.

viii. Estimates/Declaration:this will detail the procedures to be

followed should the policy premium be based on an estimated

figures.

a. LEGAL DOCUMENT: whatever be the cover provided

by the policy.
 b. INSURER’S RESPONSIBILITY: the insurer who drafts

the policy is primarily responsible for any ambiguities

and they are interpreted against them.

c. PRICIPLES OF CONSTRUCTION:

Construction of a policy of insurance is a matter to be

decided by the court. The court decides the meaning of

the words used in the policy.

d. WRITTEN WORDS VS PRINTED WORDS:

The written words will be given morew weightage than

the printed words. The written words reflect the latest

language and terms selected by the insurer and accepted

by the insured. The pre-printed words on the other hand

are broadly speaking, adapted equally to specific case as

also to all other insureds with the type of policy.

CONTRA PROFERNTUM RULE:

Where contractual language is capable of two alternative

interpretations, it will be construed against the insurer

who drafted the contract and in favour of the insured.

INSURANCE PROPOSAL FORM:

a. Generic Questions:
i. Name

ii. Website

iii. Coantact information

iv. Address

v. Location

vi. Business

vii. Period of insurance

viii. Insurance history

ix. Claims experience

x. Convictions

xi. Declaration

xii. Exposure

xiii. Policy limits

xiv. Specific questions

# For most classes, the policy structure is standard and divided

into 7 components

#. Claims forms are used for the both: obtaining claims

information and building database for analysis.

# The conventional classification of the general insurance as

provided under section 2 of the Insurance Act, 1938:

a. Fire Insurance

b. Marine Insurance
 i. Cargo

ii. Hull

c. Miscellaneous Accident Insurance

d. Health Insurance

# In the present and recent times General Insurance is

classified differently as under:

a. Insurances of property

b. Insurances of persons

c. Insurances of personal honesty

d. Insurances of Liability

The Risk

Cover Notes - a cover note is issued to confirm protection under the policy. It

gives description of cover. Validity of cover note is usually for a period of a

fortnight and rarely up to 60 days

Cover notes - predominantly in marine and motor classes of business. Marine

Cover Notes - issued when details required for the issue of policy such as

name of the steamer, number of packages, or exact value etc. are not known.

Motor Cover note is to be issued for 60 days.

The fact which reduces the risk need not be disclosed

Insurer is prohibited from accepting the risk unless full premium is paid in

advance as per Section 64 VB of the Insurance Acinsurance

The Motor Vehicles Act 1988 covers the conditions relating to the motor

certificate.

The insurance Act, 1938, Section 2 (13A) defines Marine Insurance

business as 'the business of effecting contracts of insurance upon vessels of

any description, including cargoes, freights and other interests which may

be legally insured, in or in relation to such vessels, cargoes and freights,

goods, wares, merchandise and property of whatever description insured

for any transit by land or water, or both, and whether or not including

warehouse risks or similar risks in addition or as incidental to such transit,

and includes any other risks customarily included among the risks insured

against in marine insurance policies'.

A standard fire and special perils policy provides protection against loss

due to fire and specified perils.

A standard fire and special perils policy can be modified and customised to

suit a customer's requirement.

Marine insurance policies are of 2 types: marine hull insurance and marine

cargo insurance

There are 4 types of losses under Marine Insurance: total loss, partial loss,

sue and labour charges and salvage charges

Marine policies based on the type of cover chosen, can be classified into 5

types: specific policy, open cover, open policy, annual policy / sales

turnover policy, duty and increased value policy.

Replacement cost is paid for the property by the insurer under

Reinstatement Value Policy.

Sue and Labour Charges are expenses that are incurred by the insured to

minimise or avert a loss covered by the policy.

Floating policy covers stock at various locations under one sum insured.
Marine hull insurance covers damage to actual structure of the vessel. It

does not cover loss or damage to the cargo carried by it.

Consequential loss policy provides cover for loss of gross profit due to

stoppage of production.

For the purpose of insurance, motor vehicles are classified into three broad

categories: (a) private cars, (b) motor cycles and motor scooters and (c)

commercial vehicles.

The Motor Vehicles Act (1988) prescribes rules and regulations for

licensing, use and insurance of all types of vehicles.

Important documents in motor insurance include: certificate of insurance,

cover notes, policy of insurance. Act only policy form covers exactly the

liability as required to be covered under the MV Act.

Package policy form covers Own Damage Losses and Act Liability. It also

has add on covers. Different insurers have different add on covers and

rates of premium.
Under liability insurance there are four major legal liability policies: (a)

public liability, (b) product liability, (c) professional indemnity and (d)

employer's liability.

The purpose of personal accident insurance is to pay fixed compensation

for death of disablement resulting for accidental bodily injury. It is not a

strick indermnity policy but a benefit cover.