Insurance Contract

Question 1

What are the elements of an insurance contract?

Answer 1

An insurance contract exists where the following elements concur:

1. The insured has an insurable interest;
2. The insured is subject to a risk of loss by the happening of the designated peril;
3. The insurer assumes the risk;
4. Such assumption of risk is part of a general scheme to distribute actual losses among a large group of persons bearing a similar risk; and
5. In consideration of the insurer’s promise, the insured pays a premium.

An insurance premium is the consideration paid an insurer for
undertaking to indemnify the insured against a specified peril. In fire, casualty,
and marine insurance, the premium payable becomes a debt as soon as the
risk attaches.