Home / Tag Archives: Principles of Insurance

Tag Archives: Principles of Insurance

Waiver Of The Principle Of Proximate Cause

Sometimes the application of the principle of proximate cause may be waived by insurers through policy condition. The best example here is perhaps the “standard fire policy”. The fire policy does not cover the loss due to “spontaneous fermentation”, but any resultant fire damage is covered. This is because the insurers have used the word “its own” before “spontaneous fermentation” which means that only the property subjected to spontaneous fermentation is excluded but any resultant fire damage is covered. Had the words “its own’ not been there the resultant fire …

Read More »

Rules For Application Of Proximate Cause In Insurance

To treat proximate cause as if it was the cause which is proximate in time is out of the question. The cause which is really proximate is that which is proximate in terms of efficiency. That efficiency might have been preserved although other causes might meantime have sprung up, which have not yet destroyed it or really impaired it, and it may culminate in a result of which it still remains the true efficient cause to which the event could be ascribed. With regard to pay-ability or otherwise of a …

Read More »

The Principle Of Proximate Cause In Insurance

Until recent past the Principle of proximate cause was not used to be considered as a principle as such. However, the present school of thought has given this doctrine the status of a principle and, therefore, now-a-days it is considered to be one of the six principles of insurance, backed up by sound rules and legal dictum. The principle of proximate cause virtually revolves around the claims administration and, more precisely, diagnosing the pay-ability or otherwise of a claim on the question of perils covered by a policy. A policy …

Read More »

Principle Of Contribution Under Common Law And Policy Condition

Principle Of Contribution Under Common Law: The Principle is corollary to the principle of indemnity and will maintain its continued existence to preserve the principle of indemnity. Therefore, it applies only to those insurance contracts which are contracts of indemnity. As life and personal accident contracts are not contracts of indemnity, this principle does not apply thereto. It should be clearly borne in mind that even though there is no contribution condition in the policy, that is to say that even if it is not mentioned in the policy that …

Read More »

How To Calculate Contribution In Insurance

If we want to Calculate Contribution In Insurance, then a few things should be checked. Once it is established that the factors which influence the application of the principle of contribution – are satisfied and contribution is to apply then the next course is to find out the liability under each insurance policy. Usually, this is on the sum-insured basis under each policy and is commonly known as proportionate liability or respective liability of each policy. The formula applied to Calculate Contribution In Insurance is = (Sum-insured under each policy …

Read More »

Factors Influence The Application Of Principle Of Contribution In Insurance Claims

It has to be remembered that as Principle Of Contribution has had its birth from the principle of indemnity and will maintain its continued existence to preserve the principle of indemnity, therefore, it applies only to those insurance contracts which are contracts of indemnity.It is virtually in the perspective of claims settlement that- this doctrine is of vital importance. In this regard the following considerations must be noted carefully by the students or readers: When Contribution Operates? Before the Principle Of Contribution can operate the following conditions must be fulfilled …

Read More »

What Is Principle Of Contribution In Insurance

It has been well established through the Principle of indemnity that on the happening of a loss, the insured shall be placed back into the same financial position, as if no loss has taken place. He shall be paid neither more nor less. In order to preserve this principle if, there comes up any possibility which is likely to disturb this principle, that is to say, if somebody is likely to get more than the amount of loss, then, that has to be checked so that the principle remains undisturbed. …

Read More »

Use Of Subrogation In Insurance Claims

It has already been explained in my previous article on how subrogation arises and how this goes to the benefit of insurers. In so far as the application or use of subrogation in insurance claims is concerned, certain considerations must be properly grasped and these are presented as follows : (a) When Subrogation Arises : The position is different with regard to common law and with regard to contractual terms and conditions. Under common law the position is this that the insurers must pay the claim first before the right …

Read More »

How The Right Of Subrogation Arises In Insurance

Consider an example that ‘X’ had been to Ottawa driving his car. After parking the car somewhere in front of the market he went inside, made some shopping, came back and found that ‘Y’ was damaging the car. In law “X” has a legal right of action against ‘Y’ for damages. Incidentally ‘X’ may also have a comprehensive motor insurance which protects him against such losses. Here ‘X’ has open to him two avenues of recovery and the principle of subrogation asserts that if the insurers pay the full loss …

Read More »

Difference Between Salvage And Abandonment In Insurance

Salvage And Abandonment have different meaning in insurance. Salvage generally refers to remains of the property after a loss. Usually, as a result of a loss the whole property is not lost, damaged or destroyed. Mostly, there remains some value in the damaged property or may be it is a case of partial loss when the question of salvage becomes more prominent. Salvage And Abandonment: The rule is this that when it is a case of partial loss, the insured can only claim to the extent of the loss or …

Read More »

Powered by WordPress