Page 68 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Unit 4: Contract of Insurance

The business of insurance is sustained by a complex system of risk analysis. Notes
Life insurance is insurance of human life and is a long-term business while general insurance
is an annual business with some exceptions.

Various insurance policies cover a wide variety of approaches to share and transfer risks.
Liability insurance may cover a wide range of risks arising under various branches of
motor, marine and aviation insurances and also under the liability of employers and
public ownership of property, manufacturing and construction operations, the sale and
distribution of products and many other exposures.

When the prospect proposes to enter the contract of insurance, it is an offer and if there is
any alteration in the offer that would be a counter-offer.

A person is said to be of sound mind for the purpose of making a contract if at the time
when he makes it, he is capable of understanding it and of forming a rational judgment as
to its effect upon his interest.

The company’s printed proposal form is normally used for making an application for the
required insurance cover.

Policy forms, like proposal forms, vary within wide limits as between different classes of
insurance but they have certain features in common. The policy is a document which
provides evidence of the contact of insurance.

Cover notes are issued when the negotiations for insurance are in progress and it is
necessary to provide cover on a provisional basis or when the premises are being inspected
for determining the actual rate applicable.
A certificate of car insurance may be requested by a bank or lender that financed the
purchase of a vehicle in some circumstances.

Partial insurance in the field of health leaves patients unable to file claims for certain types
of care despite having coverage in other areas.

4.7 Keywords

Certificate of Insurance: A certificate of insurance is a document that is issued by an insurance
company, at the request and on behalf of, an insured policyholder.
Cover Notes: A cover note is a document issued in advance of the policy. It is issued when the
policy cannot for some reason or the other, be issued straight away.

Group Insurance: Group insurance is nothing but insuring a group of individuals together.
Insurance Contract: An insurance contract is whereby, for specified consideration, one party
undertakes to compensate the other for a loss relating to a particular subject as a result of the
occurrence of designated hazards.
Life Insurance: Life insurance is insurance of human life and is a long-term business while
general insurance is an annual business with some exceptions.
Marine insurance: Marine insurance, indemnifies the financial loss resulting from damage to
property due to the perils that are primarily those associated with water transportation.
Partial insurance: Partial insurance can refer to any type of insurance that omits certain risks or
only covers costs in specific circumstances.
Policy Form: The policy is a document which provides evidence of the contact of insurance. This
document has to be stamped in accordance with provisions of the Indian Stamp Act 1899.

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