Question

Insurance refers to the business of accepting liability by way of giving insurance cover including reinsurance in respect of any loss of life, personal injury or liability to pay damage or compensation contingent upon the happening of a specified event. It aims at reducing or completely eliminating certain measurable risks of economic loss. They include compensation for loss of life, protection against property losses through payment of a fee called the premium as consideration for indemnity should the risk insured against occur. Generally, this involves transfer of risk from the insured to the insurer.
Required

Comment on the requisites or essentials of the law of insurance to ensure effective contract is entered into between the insured and the insurer.

Answer 1

As given in the question the insurance is a contract between two parties one is insurer and other is insured. This contract between the two parties agreed with an agreement to pay a fixed amount of premium every year what ever is the payment mode is paid for any kind of losses occurred.

The insurance company insures the person on some terms and conditions to be followed by the person who is taking the insurance. The insurance can be provided to the person and the property of the person and there are several insurance services are provided by the insurance company and from the banks and by other NBFCs,

Every contract is based on an agreement which is made by the consent of both the parties, ready to make contract under the law of insurance. There are two elements of contract one is general contract and other is special contract.

And insurance is a special contract which involves some principles:

*Insurable interest like the person who has taken the insurance should follow the laws and regulations there should not be any illegal activities between the insurer and the insured.

*The policy holder must disclose all the things like financial and personal information to the insurance company and the company must disclose all the terms and conditions of the insurance which he is giving to the customer.

*To avoid the crime in the society and in personal both the parties have to disclose the terms and conditions to both the parties then only can be created and signed.

*If the insured dies before the completion of contract then the third party like the nominee have the right to collect the amount of loss.

Thus the policy holder and the insurance company has to follow of the legal formalities before signing the contract.