Insurance for covering risk

Insurance for covering risk

What are the requisites of insurance for covering risk

Requisites of insurance may be summarized as follows:
1) Insurance must be effected by means of a legal contract and must meet the general requirements of contract as follows:
a) It must be made by parties with legal capacity of contract.
b) It must be effected with a meeting of minds of the patries.
2) For any insurance contract to be valid, it is necessary  to have insurable interest of the insured on the subject of insurance. This means that an insured person must suffer a financial loss to himself.
3) Property and liability insurance are subjected to the principle of indemnity which state that a person must not be indemnified more than his actual loss in the event of damage caused by a insured peril. Principle of subrogation ought to be followed where the principle of indemnity is in existence. Under this  principle, the insurer is entitled to subrogation which means they acquire the right to recover from the liable of third parties. This is necessary to reinforce the principle of indemnity i.e to prevent the insured to receive more than actual loss.

Different methods of re-insurance

Different methods of re-insurance What are the different methods of re-insurance? Reinsurance can be effected broadly by two methods: (a) Facultative; and (b) Treaty. Facultative reinsurance is effected only in …

What is Reinsurance

What is Reinsurance It is understood that in insurance the fund of the policyholders is managed by insurance companies and the losses incurred by a few are shouldered by many. …

The Actuarial Principle of Life Insurance

The Actuarial Principle of Life Insurance The actuarial side of life insurance is the function of mathematicians. An actuary or mathematician with the help of mortality table can calculate the …

What is the greatest value of Insurance

What is the greatest value of Insurance Insurance is a socio-economic institution that reduces risk both to society and to individuals. This is done by combining under one management, a …