2.

Objective type
1. The term ‘Risk’ includes :
Ans. All the above
2. The main purpose of having life insurance is :
Ans. None of the above
3. A policy where the policy holder makes a one- time payment of premium, is known as a-3.
Ans. Single premium policy
4. Find out which of the following cases includes the concept of public liability insurance:
Ans. All the above
5. The Marine Insurance Act was passed in the year:
Ans. None of the above
6. The liability under the insurance policy is:
Ans. Contratual
7. Event insured against life insurance contract are:
Ans. Accident
8. Which was the first Act to regulate life insurance industry in India:
Ans. Insurance act, 1938
9. When was the IRDA introduced in the field of insurance law.
Ans. 2000
10. Which of the following is not the principal of insurance:
Ans. Maximization of Profit

1. Write short note on following topics:

1. What do you mean by ‘Inchmaree clause’?
Ans. An Inchmaree clause is a provision common in maritime insurance policies that cover a
ship's loss or damage due to reasons such as:
1. Erroneous actions or decisions made by personnel
2. Damage to important ship equipment and overall machinery
3. Errors in navigation
4. Damages related to docking

This clause covers most damages to the ship unrelated to "perils of the sea."

2. What is ‘customary and respondentia bond’ explain.

Ans. Customary Bond

A Customs bond is a contract between three parties (Customs, a principal (i.e. an importer),
and a surety) to ensure that all the duties and fees associated with the rules and regulations of
importing or other Customs activities are paid to Customs by the principal.

A Customs bond is a requirement to import into the US as per US Customs regulations, and
as such an importer should obtain a bond through a reputable and reliable company.

Respondentia bond

Hypothecation of a ship’s cargo is called respondentia and is effected by a respondentia bond.

A respondentia bond is a loan upon the mortgage or hypothecation of a ship’s cargo and
generally, it is only a personal obligation on the borrower. It is not a specific lien on the
goods unless there is an express stipulation in the bond. In case of loss, the loan amounts to
an equitable lien on the salvage.

3. Define perils of the sea and simply enlist them

Ans.The term “perils of the seas” refers only to fortuitous accidents or casualties of the seas.
Perils of the sea means everything which happens to the vessel during the voyage by the act
of god without any intervention of a human. It does not include the ordinary action of the
winds and waves.
Perils of sea covers –
1. foundering at sea- if a ship to be missing for a duration of time and there is no news about
the missing ship, it would be considered as founding at sea. This loss is assumed as caused by
the perils of sea.
2. Ship wreckage- in a case where the ship collides against a hill or rock and is driven to the
shore by the violent winds, it would be considered as shipwreck.
3.Stranding- in a situation where a ship got out of the action after an accident and struck up in
a shallow region of sands, it would be called stranding.
4. Collision- in a case, where the ship collides with another ship, it will be considered as a
collision.

The most important requirement to establish this peril is to prove the fortuitous factor, which
for example a willful misconduct of the assured by scuttling the vessel by assistance of his
crew, even insured against the master and crew willful misconduct cannot establish this peril.

The leading case of Samuel v Dumas 1924. In this case the owner of the vessel scuttled his
own vessel willfully by opening the seacocks or by boring holes in her side. The perils of the
sea cannot be established due to the absence of the fortuitous element.
4. Discuss the effect of voyage-deviation in marine insurance contract.

Ans.

5. Whether contract of life insurance is a contract of indemnity?

Ans. Meaning of Contract of Indemnity
The term indemnity literally means security or protection against a loss or compensation.
According to Section 124 of the Indian Contract Act, 1872 A contract by which one party
promises to save the other from loss caused to him by the conduct of the promisor himself, or
by the conduct of any other person, is called a contract of indemnity.
Life insurance not a contract of indemnity as Fire and marine insurance contract, in general,
are contracts of indemnity, that is, they provide for compensating the insured for loss or
damage sustained. A contract of life insurance, however, forms an exception to the general
rule. A contract of life insurance is a mere contract to pay a certain sum of money on the
death of a of person (or on maturity) in consideration of the payment of a certain sum of
money at periodical intervals.
A life insurance contract does not resemble a contract of indemnity because the insurer does
not undertake to indemnify the assured for any loss on maturity or death of the assured but
promises to pay sum assured in that event. A policy of insurance on one’s own life is not an
indemnity because it is merely a contract to pay a certain sum in the event of death
There is no question of indemnification in such a case, for the loss resulting from death,
cannot be estimated in money. Life insurance is adopted as a means of saving; the idea of
indemnity is foreign to it.

6. Discuss the effect of absence of insurable interest on an insurance contract.

Ans. The contract of insurance to be valid it is not only necessary that the parties to the
contract are competent to contract, it is made with free consent and the consideration is
lawful, beside all this it is also necessary that the insured has insurable interest on the
subject matter of the insurance. if there will be no insurable interest then contract will
amount to wager.

Insurable interest in broad term means that the party to the insurance contract who is
insured or policyholder must have a particular relationship with subject matter of the
insurance, whether that be a life or property. The concept of insurable interest is of
particular importance in marine and life insurance.

7. Explain Uberrimae fides ?

Ans. Uberrimae fidei or "uberrima fides" literally means "utmost good faith" in
Latin. It requires parties to certain contracts to exercise the highest standard
of full disclosure of any relevant conditions, circumstances, or risks to
their counterparties.
Failing to disclose material facts that might influence the other party's decision
when entering into a contract where uberrimae fidei applies can result in the
contract being rendered null and void and the other party being released from
any obligations under the contract. The principles of uberrimae fidei were first
expressed by Britain's Lord Mansfield in the case of Carter v Boehm (1766).
Voidable means that it could be declared void, i.e., not valid. Uberrimae fidei is Latin for
‘utmost good faith’ (literally ‘most abundant faith’).

8. Explain the meaning of subrogation

Ans. Subrogation is a term describing a right held by most insurance carriers to

legally pursue a third party that caused an insurance loss to the insured. This
is done in order to recover the amount of the claim paid by the insurance
carrier to the insured for the loss.
The subrogation process is meant to protect insured parties; the insurance
companies of the two parties involved work to mediate and legally come to a
conclusion over payment. Policyholders are simply covered by their insurance
company and can act accordingly. It benefits the insured in that the at-fault
party must make a payment during subrogation to the insurer, which helps
keep the policyholder's insurance rates low.
A waiver of subrogation is a contractual provision whereby an insured waives
the right of their insurance carrier to seek redress or seek compensation for
losses from a negligent third party. Typically, insurers charge an additional fee
for this special policy endorsement. Many construction contracts and leases
include a waiver of subrogation clause.
9. Explain in short the concept of ‘social liability insurance’.

Ans.

10. Explain in short the concept of ‘causa proxima’ in fire insurance contract.

Ans. Causa Proxima

It is a rule of law that in actions on fire policies, full regard must be had to the causa proxima. If the proximate
cause of the loss is fire, the loss is recoverable. If the cause is not fire but some other cause remotely connected
with fire, it is not recoverable, unless specifically provided for. Fire risks do not cover damage by explosion,
unless the explosion causes actual ignition, which spreads into fire. The cause of the fire is immaterial, unless it
was the deliberate act of the insured.

Steps to be taken in fire insurance claims

1. It is the duty of the insured, or any other person on his behalf, to give immediate notice of fire to the
insurance company so that they can safeguard their interest, such as, deal with the salvage, judge the cause
and nature of fire and assess the extent of loss caused by the fire.
2. Failure to give notice may avoid the policy altogether.
3. The insured is further required by the terms of the policy, to furnish within the specified time, full particulars
of the extent of loss or damage, proof of the value of the property and if it is completely destroyed, proof of
its existence.
4. Delivery of all these details to the company is a condition precedent to the claim of the assured to recover
the loss. If the assured prefers a fraudulent claim, whether for whole or part of the policy, he would forfeit all
benefits under the policy, whether or not there is a condition to this effect in the policy. Generally, the fraud
consists in over -valuation, but over-valuation due to mistake is not fraudulent. In a majority of fire insurance
claims, the expert assessors of the company are able to arrive at mutually acceptable valuation.