Summary Insurance Law Lml4805 Study Notes

CONCEPT OF INSURANCE, INSURANCE CONTRACT AND INSURANCE LAW,INSURANCE IN ECONOMIC AND LEGAL SENSE, SOME CLASSIFICATIONS 1.1. INTRODUCTION: INCIDENCE, MANAGEMENT AND SPREADING RISKThe purpose of insurance is “spreading the risk” among various persons. 1.2. INSURANCE IN ECONOMIC AND LEGAL SENSE. INSURANCE CONTRACTAND INSURANCE LAW • An Insurance Contract can either be concluded voluntarily or imposed statutorily on the parties. • The main aim of the contract is “transference of the risk”. • At Common Law private individuals could be insurers and enter into Insurance Agreements. However, it is now law that only a registered insurer can conclude Insurance Agreements. The following definition of insurance was provided in Lake v Reinsurance Corporation Limited (1967)(W): “A contract between an insurer (or assured) and an insured (or assured) whereby the insurer undertakes, in return for the payment of a price or premium to render to the insured a sum of money or its equivalent, on the happening of a specified uncertain event in which the insured has some interest”. (However, this definition has been criticised as being vague). • General principles of the Law of Contracts apply to Insurance Contracts. 1.3. CLASSIFICATION OF INSURANCE CONTRACTS Classification is important because certain legal principles apply to only some types of Insurance Contracts and not others. However, one type of contract may belong to difference classes at the same time.