In the most general sense, an insurance contract can be defined as an agreement in which a person called an "insurer", for a fixed amount called an "insurance premium", undertakes to pay another person - the "insured" a certain amount of money or its equivalent upon the occurrence of the insured event.
There must be an element of uncertainty in the insured event. This uncertainty may consist in life insurance, despite the fact that the event will inevitably occur naturally, it is not clear exactly when or that the causes of the event itself are unpredictable, and therefore it may never occur. Therefore, in the latter case, it is customary to use the term "accident".
In addition to the above, the insured event must, by its nature, be contrary to the interests of the insured party or, in other words, the event must be such that, if its consequences occur, they cause damage to the insured.
Parties to the insurance contract
The parties to the insurance contract are the "insured" and the "insurers".
Any able-bodied person can be a party to an insurance contract. A minor could also enter into a contractual relationship only if it was in his favor. Otherwise, the contract may be terminated. In case the contract is concluded by persons intoxicated or persons placed under full incapacity, then this contract is null and void.
Occupational insurance activities have the right to be performed by insurance companies and individual insurers.
a) Insurance companies
The right of an insurance company to participate in a certain type of insurance depends on the conditional memorandum of the Association and the legal framework governing the insurance business.
An insurance policy that is not provided for in the memorandum or is issued in violation of the terms of this document is invalid and cannot be offered.
If the insured person is in good faith and during the review of the general conditions was not familiar with the internal decisions of the company imposing restrictions in this type of insurance, then these decisions are not valid for this person. It is necessary for the person to have been in good faith at the time of concluding the contract, it is irrelevant the fact of knowing these decisions after its conclusion. Therefore, the person may enter into a contract with the company that would be ultra vires under other conditions. If it is proved that the insured person is in bad faith, he / she is not entitled to claim the amount due to him / her according to the policy, although he / she is entitled to receive his / her insurance premium back.
The memorandum adopted by the Association of Insurers specifies exactly what types of insurance to be concluded or explicitly prohibits some of them. Insurance that is outside the specified types or belongs to the prohibited types is ultra vires and therefore invalid.
Insurance permitted by the memorandum, for which an insurance company has concluded a contract, is not invalid due to the fact that the company has not specified in advance the inclusion of this type of insurance in its activity. For example, if a company has previously reduced its activities to life insurance only, it may also issue fire insurance or loyalty insurance policies.
b) Individual insurers
In the case of individual insurance agents, as in the case of Lloyd's members, there is no problem of incompetence in concluding contracts for certain types of insurance.
Since Lloyd's policies are usually locked by a person who represents a group of insurers known as his "names", the credentials of the person who actually signs the policy and includes the "names" are essential to the validity of the policy.
Types of insurance contracts
Insurance contracts can be classified based on three different factors:
• According to the nature of the event for which the insured amount is paid;
• According to the nature of the insured goods;
• According to the nature of the compensation;
According to the nature of the event
Based on this factor, we distinguish four main types:
• Marine insurance - the one in which the insured amount is paid in case of a maritime accident;
• Fire insurance - the one in which the insured amount is paid in case of fire;
• Life insurance - the one in which the insured amount is paid upon death;
• Accident insurance - one in which the insured amount is paid in the event of other insured events.
The differences between the types of insurance established by practice and indicated by their different names are, to a large extent, conditional. The scope and name of each type may vary depending on the way different insurers proceed. The differences between the types of insurance do not have to be of a legal nature. They may be due to the changing needs in society that the insurer is trying to meet for its more successful business. Sometimes it is more appropriate to offer protection against a particular hazard, such as burglary or fire. In other cases, insurance may be offered in respect of a particular type of property against the dangers to which it is exposed, such as in the case of livestock insurance, insurance against loss of a document or against all consequences for the holder arising from his right of ownership. vehicle insurance.
According to the nature of the insured goods
The different types of insurance are differentiated according to the nature of the damage caused by the event. The insured may temporarily or permanently lose his ability to work or die, his property may be destroyed or damaged, or he may be bound by some liability.
a) Personal insurance
With this type of insurance, the event affects the insured person or third parties. This group includes life insurance, accident insurance and sickness insurance.
b) Property insurance
In this type of insurance, the event affects the property of the insured. This group includes: marine insurance, fire insurance, loyalty insurance, insolvency insurance, as well as insurance in case of loss of property caused by other events, such as crockery insurance, livestock insurance, loss insurance of a document, insurance against risks during the war.
c) Liability insurance
In this case, the event is related to the liability of the insured to a third party. This group includes:
The same policy could combine several insurances that are from different groups. The reason for such a combination could be the very comfort it brings. For example, a comprehensive business insurance could be both against fire or robbery and against the risk of liability. In other cases, this combination is required provided that the insured must be fully insured if it is likely that an unforeseen event will affect him from several parties.
In this way, a road accident could not only damage the vehicle and injure its owner, but also make him liable to third parties. For example, the explosion of a steam boiler can destroy not only it, but also the building in which it is located. This outbreak can cause injury or death to workers hired by its owner, and could also affect neighboring buildings or injure others. Accordingly, a vehicle policy or a steam boiler policy is usually designed to be applicable to all or most of the cases mentioned.
According to the nature of the compensation
Under some insurance contracts, a certain amount of money is paid upon the occurrence of the insurance event. And for others, compensation is paid.
a) If the contract is not related to indemnification
In this group of insurances, the amount of indemnity is not measured depending on the amount of the insured's losses, but is paid upon the occurrence of the event, regardless of whether the insured actually incurs a monetary loss or not.
So, life insurance contracts, personal accident insurance are not indemnity contracts.
b) If the contract is related to disposal
In this group of insurances the amount of indemnity is measured depending on the amount of the property loss of the insured. This group includes all types of insurance contracts with the exception of life insurance, personal accident insurance and sickness insurance.
The marine insurance contract is one of them. The Marine Insurance Act of 1906 states:
"A marine insurance contract is a contract in which the insurer undertakes to indemnify the insured in the manner and amount agreed upon by both parties in the event of losses due to a marine casualty."
The same procedure applies to fire insurance.
Even when, under the terms of the contract, the insurer expressly undertakes, in the event of loss or damage to the property of the insured in case of fire, to pay compensation for losses and damages amounting to a certain amount, the contract is only a contract for indemnification.
The insurance contract, which is otherwise a contract providing indemnification, does not cease to be such because it is included in an "assessed" policy, which ensures the payment of a certain amount in the event of an insured event. The significance of the assessment lies in the fact that it eliminates the need to prove the amount of losses. Still, the insured must prove that he has in fact incurred losses.
When a lawsuit is filed against the insurer for illegal rejection of an insurance policy for indemnification, the landfill is filed for unpaid damages rather than for debt. The amount of damages is measured by the loss incurred by the insured so far, as they are direct. In most cases, the only loss incurred is that the insurer has failed to pay the amount due, and the result is what it would be in the event of a claim for payment of a debt.
Sometimes the losses are greater: when the insured bears all the costs of his defense for a lawsuit filed against him by a third party and these costs are borne as a result of the insurer's waiver of liability under the policy.
Source: ER Hardy Iwami - Insurance: Principles, Law and Practice