Laws of Insurance Formation of Contracts of Insurance
FOURTH YEAR (BB.SC ) MARKETING MANAGEMENT
LECTURE BY DR. KHIN MYA WIN
INTRODUCTION As insurance contracts are made in common forms there is no negotiation of the terms and the agreement is just issue and takes a policy on the parts of insurers and assured respectively.
OFFER
Proposal- The first step in the making of a contract of insurance is the proposal or application by means of which the assured gives to the insurers particulars of the risk
VALID OFFER (1) The alleged offer must be intended by the party making it to be an offer. (2) The alleged offer must be complete. (3) The alleged offer must be communicated to the other party. (4) The alleged offer must be in force at the time when the other party purports to accept it. Assured's name, address and occupation
DESCRIPTION OF THE RISK This
varies according to the nature of the insurance. In the case of personal accident insurance, the age, weight and height of assured must be stated. In the case of property insurance a full description of the property must be given. In the case of liability insurance, the circumstances out of which the liability may arise must be stated.
DESCRIPTION OF CIRCUMSTANCES AFFECTING THE RISK
The circumstances connected with the proposed insurance tending to how that the risk is grater than usual must be stated. For example, in the case of personal accident insurance, state of health and physical defects. In the case of property insurance, any measures taken to prevent or minimize loss may be stated.
PREVIOUS HISTORY OF PROPOSED ASSURED Two things be stated: (a) the experience of the proposed assured. (b) the relations of the proposed assured with other insurers:
ACCEPTANCE There are four methods of accepting an offer. These are: (1) By a formal acceptance (2) By the issue of a policy (3) By the acceptance of a premium (4) By the conduct of the insurers (5) Methods of accepting an offer
ACCEPTANCE
Stamp- The insurers are bound to issue a stamped policy within a month after receiving the premium.
ACCEPTANCE
Cover notes - The applicant may want immediate protection pending the acceptance of his proposal and prior to the issue of a formal policy, and the insurers may be willing to give it provided they are free to withdraw from the temporary bargain after they have made inquires.
ACCEPTANCE
Slip. The accepting underwriter marks on the slip the amount which he is willing to take and signs or initials it.
ACCEPTANCE
Policies under seal The requirement that a deed should be "delivered" is now a mere formality and where a policy purports to be signed, sealed and delivered.
ACCEPTANCE
Receipt and acceptance of policy the binding effect of a policy not under seal depends entirely on terms it contains have been agreed by both parties, and neither the assured nor the insurers will able to take advantage of a policy.
ACCEPTANCE The policy- A contract of insurance is embodied and written in a formal document called a "policy". Renewal Policies of insurance are not renewable beyond their original term unless they are expressed to be so, and where there is no provision for renewal they can only therefore be renewed by a new agreement between the parties.