After Listening to the Name of Insurance Contracts First Question Arises in Our Mind is-What is Insurance Contract?.This Very Well-Known Question tended to ask Among Professionals.Nowadays People are very aware and Quire to Before taking any insurance policy,That what is Insurance Contracts We are Going to entering with Insurance Company?.
Of course, this is valid Question Which must be known by all the people who are dealing with Insurance company or taking his Own insurance policy.
In insurance, the insurance policy is a contract (generally a standard form contract) between the insurer and the insured, known as the policyholder, which defines the claims which the insurer is legally required to pay.
An insurance contract is an agreement in which one party, the insurer, holds significant insurance risk from another party, the policyholder, to recompense the policyholder if a specific uncertain future event affects the policyholder. A policyholder enters into an insurance contract with insurance company’s main objective is to alleviate its risk of loss.
A contract of insurance is one whereby one party (the insurer) offers for a consideration to pay money or provide a corresponding benefit to or for the benefit of the other party (the assured) upon the happening of an event which is uncertain, either as to whether it has or will occur at all, or as to the time of its occurrence, where the object of the assured is to provide against loss or to neutralize for prejudice caused by the event, or for his old age (where that event is the reaching of a certain age by the assured) or for the benefit of others upon his death. It is these objectives and Terms which separate insurance from gaming or wagering.’
There are Various Examples of Insurance Contracts.Some of Them are:-
⇒Insurance against property theft.
⇒Insurance against professional liability.
Note:Self-insurance is not an insurance contract.
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Types of Insurance Contract
Insurance Contract is of Two Types.
⇒CONTRACT OF INDEMNITY:
Except the life insurance contract ,all other types of insurance contracts are contracts of indemnity.These contracts are fire insurance , marine insurance , theft insurance , etc. Under the contract of indemnity, insured pays premium to the insurance company and insurance company takes the burden of compensating the insured if he suffers any loss on the insured property.
⇒LIFE INSURANCE CONTRACT:
This contract is not a contract of indemnity.The value of life of any human being cannot be estimated hence it is very difficult to calculate the exact amount of loss . Under such contracts insured pays a fixed premium every year and insurance company takes the responsibility of compensating the insured, either at the expiry of policy or on his death.