With specific reference to the contract of insurance: Highlight six essentials of an insurance contract
Essentials of an insurance contract are;
- Agreement: For a contract of insurance to exist, there must be an agreement under which the insurer is legally bond to compensate the other party or pay the sum assured (premium).
- Uncertainty: The insurance is a leatory, contingent or speculative as it deals with uncertain future events for an extent to be insurable it must be characterized by some uncertainty.
- Insurable interest: The insurable event must be of an adverse nature i.e. the insured must have aninsurable interest in the property, life or liability which is the subject of the insurance. It is said to be the pecuniary or financial interest which is at stake/in changes if the subject matter is not insured.
- Control: The insurable event must be beyond the control of the party assuring the risk as it was hold in Re sentinel Securities P.L.L
- Accident or negligent loss: Insurances can only be affected where loss is accidental in nature or is a consequence of a negligent act or omission. Loss occasioned by intentional acts does not qualify for indemnity or for payment of the sum assured.
- Risk: Is the probability of loss or the probability of any outcome different from the one expected. It is a condition in which there is a possibility of an adverse deviation from a desired outcome that i.e. expected or hoped for. For individual proposes, risk is measured by the probability of loss as the individual hopes so that it would not occur.