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Insurance is a contract where insured pay premiums and insurers pay financial losses from events. Risk is accidental happenings causing monetary loss. Insurance shares risk among large groups so losses of individuals are distributed. Insurance can be defined functionally or contractually as transferring risk from few to many exposed to the same risk.

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22 views2 pages

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Insurance is a contract where insured pay premiums and insurers pay financial losses from events. Risk is accidental happenings causing monetary loss. Insurance shares risk among large groups so losses of individuals are distributed. Insurance can be defined functionally or contractually as transferring risk from few to many exposed to the same risk.

Uploaded by

arjipradhan
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

INTRODUCTION Insurance is a contract whereby, in return for the payment of premium by the insured, the insurers pay the

financial losses suffered by the insured as a result of the occurrence of events. The term risk is used to describe all the accidental happenings, which produce a monetary loss. Insurance is an ethos in which a large number of people exposed to a similar risk make contributions to a common fund out of which the losses suffered by the unfortunate due to accidental events, are made good. The sharing of risk among large groups of people is the basis of insurance. The losses of an individual are distributed over a group of individuals. Definition There can be two approaches for defining insurance. One is functional approach other is contractual approach. Contractual Definition According to Justice Tindall, Insurance is a contract in which a sum of money is paid to the assured in consideration of insurers incurring the risk of paying a large sum upon a given contingencies. The risk becomes insurable if the following requirements are compiled with : The insured must suffer financial loss if the risk operates. The loss must be measurable in money.

The object of the insurance contract must be legal. The insured should have sufficient knowledge about the Risk he accepts. WHAT IS INSURANCE? Mankind is exposed to many serious perils such as property losses from fire and windstorm and personal losses from disability and premature death. Although it is impossible for an individual to foretell or completely prevent their occurrence but it is possible to provide against their financial affectthe loss of property and earnings. From the point of view of the individual the life Insurance may be defined as a contract whereby for a Consideration amount called the premium, one party (the insurer) agrees to pay to the other (the insured) or a beneficiary a particular amount upon the occurrence of death or any other agreed event. Insurance is the method of spreading and transfer of risks Losses of few unfortunate are shared by and spread over to many exposed to the same risk. Assets created by the owner in expectation of future needs have a value.

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