Travel Insurance Company
Insurance has developed globally because man wants to protect his belonging against certain uncertainties. Today, life is full of uncertainty and risk of losing life and commodities is always present. Risk for the purpose of insurance means uncertainty of financial loss. There are two types of risk: Pure Risk and Speculative Risk. Pure Risk means operation of which produces financial loss. Whereas speculative risk may produce gain or loss. For the purpose of Insurance it is the pure risk which is insurable. Man has devised certain techniques of controlling pure risk which is known as Risk Management. There are four main techniques of Risk Management, viz., avoidance, loss prevention and reduction, retention and lastly insurance.
s whereby person transfer the financial implications of risk on the Insurance Company. These insurance companies are varied and have different branches of operations. Some insurance policies are looking after by motor insurance, life insurance, travel insurance and the general insurance. Even the lives of livestock are cover in the general insurance. The insurance company will charge a small contribution from each member, known as the premium and this loss is made good of few unfortunate policy holders. In India, all these transactions come under a contract which is governed by the Indian Contract Act 1872.
Insurance serves many useful purposes Insurance provides financial security to individuals, serving assistance to the business. There is always loss reduction and minimization in the insurance. Insurance supports the funds for investment in various capital markets. Moreover, insurance companies like the Travel Insurance Company are good foreign exchange earner. It also provides the basis of credit and stability to the commerce industry of any nation.
Insurance Contract Insurance contract is based on three fundamental principles as follows: Principle of Utmost good faith Principle of Insurable interest Principle of Indemnity
Principle of Utmost Good faith
All contracts are based on good faith which means absence of deceit or fraud. Seller is under obligation not to misguide the buyer that is why the rule is let the buyers beware. It becomes the duty of Insured to declare all material facts which he knows or which he ought to know.
Insurable Interest Insurance is a means by which risk is transferred to the insurance company. For instance, a traveler risked the Travel Insurance Company while a motor insurer risked the motor insurance company. It means that the contract of insurance undertakes that financial loss which insured shall sustain due to operation of insured perils shall be made good. The insurable interest does not undertake that losses will not occur. However, insurable interest distinguishes insurance contract from gambling or casino. Thus, insurable interest must be present at the time of taking insurance and should be present throughout the currency of the policy.
Principle of Indemnity Insurance is a principle of indemnity. The idea is to put the insured after loss in the same financial position which he occupied before the loss. It is a step to prevent him from making profit out of misfortune.
Limitation on the insurer's liability Some limitations are sum insured or market value whichever is less; condition of average; excess and franchise; salvage; contribution and subrogation. And the methods of indemnification are cash payment, repair, replacement and reinstatement.
Proximate cause Once the cause and its effect are identified it is not necessary to go further. Law will provide that immediate cause and not the remote cause should be regarded. A person insured under a personal accident policy went out swimming and met with an accident. Due to shock and weakness, he was unable to swim.
When he came out of the water, he contracted cold which developed into pneumonia which caused his sudden death. The court held that the proximate cause of death was the original accident and pneumonia only a remote cause. Hence the claim was payable. In another circumstances, the insured fell from the mountain while traveling and was taken to the hospital. He availed the policy from Travel Insurance Company. While undergoing treatment he contracted an infectious disease which caused his death, the court gave a contrary ruling. The proximate cause of death was the disease and the initial accident only a remote cause. Hence, the claim was not payable under a personal accident policy.
Subrogation and Contribution Subrogation means transfer of rights and remedies to the insurer who has indemnified the insured in respect of loss. Insurer can not recover from the third party more than what they have paid to the insured. If amount recovered is more than what insurance company has paid excess will be paid to the insured.
Contribution means having paid to the insured full amount insurers recover proportionate amount from other insurers who are liable for the loss. This principle is necessary because insured may be tempted to take policy from different insurers and deliberately cause the loss and recover more than his financial interest in the property.
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