Insurance:

Insurance is an arrangement in which you pay money to a company, and they provide financial
protection for your property, life, or health, paying you in case of death, loss, or damage.
For insurance purposes the word "disability" will have a special and particular meaning which
will be defined in the policy concerned.
Often the person arranging your insurance will charge fees as well as receiving a commission.
the act, system, or business of providing financial protection for property, life, health, etc,
against specified contingencies, such as death, loss, or damage,
and involving payment of regular premiums in return for a policy guaranteeing such protection.

Types of Insurance:

Types of Insurance Business are;

 Life Insurance or Personal Insurance.

 Property Insurance.

 Marine Insurance.

 Fire Insurance.

 Liability Insurance.

 Guarantee Insurance.

 Social Insurance.

Life Insurance: Life Insurance is different from other insurance in the sense that, here,
the subject matter of insurance is the life of a human being. Life Insurance is different from other
insurance in the sense that, here, the subject matter of insurance is the life of a human being.
The insurer will pay the fixed amount of insurance at the time of death or at the expiry of a
certain period. At present, life insurance enjoys maximum scope because life is the most
important property of an individual. Each and every person requires insurance. This insurance
provides protection to the family at the premature death or gives an adequate amount at the old
age when earning capacities are reduced.

Property Insurance: Under the property insurance property of person/persons are

insured against a certain specified risk. The risk may be fire or marine perils, theft of property or
goods damage to property at the accident.

Marine Insurance: Marine insurance provides protection against the loss of marine
perils The marine perils are; collision with a rock or ship, attacks by enemies, fire, and captured
by pirates, etc. these perils cause damage, destruction or disappearance of the ship and cargo
and non-payment of freight. So, marine insurance insures ship (Hull), cargo and freight.
Previously only certain nominal risks were insured but now the scope of marine insurance had
been divided into two parts; Ocean Marine Insurance and Inland Marine Insurance. The former
insures only the marine perils while the latter covers inland perils which may arise with the
delivery of cargo (gods) from the go-down of the insured and may extend up to the receipt of the
cargo by the buyer (importer) at his go down.
Fire Insurance: Fire Insurance covers the risk of fire. In the absence of fire insurance,
the fire waste will increase not only to the individual but to the society as well. With the help of
fire insurance, the losses arising due to fire are compensated and the society is not losing
much. The individual is preferred from such losses and his property or business or industry will
remain approximately in the same position in which it was before the loss. The fire insurance
does not protect only losses but it provides certain consequential losses also war risk, turmoil,
riots, etc. can be insured under this insurance, too.

Liability Insurance: The general Insurance also includes liability insurance whereby
the insured is liable to pay the damage of property or to compensate for the loss of persona;
injury or death. This insurance is seen in the form of fidelity insurance, automobile insurance,
and machine insurance, etc.

Social Insurance: The social insurance is to provide protection to the weaker sections
of the society who are unable to pay the premium for adequate insurance. Pension plans,
disability benefits, unemployment benefits, sickness insurance, and industrial insurance are the
various forms of social insurance.

Guarantee Insurance: The guarantee insurance covers the loss arising due to
dishonesty, disappearance, and disloyalty of the employees or second party. The party must be
a party to the contract. His failure causes loss to the first party. For example, in export
insurance, the insurer will compensate the loss at the failure of the importers to pay the amount
of debt.

Insurance Risk: An insurance risk is a threat that is covered by an insurance policy and
can cause financial losses. When the insured event takes place and a claim is filed, the
insurance company has to pay the policyholder the agreed reimbursement amount. There are a
wide range of events that are considered insurance risks. For example, an auto accident is an
auto insurance risk, a policyholder's death is a life insurance risk, and water damage is a
homeowner's insurance risk.
Insurance premiums are calculated based on the chance that a certain insurance risk will be
realized. The greater the chance of the risk occurring, the higher the premiums will tend to be. A
driver with a history of accidents or traffic violations, for instance, will be viewed as a higher risk
to the insurer and will, therefore, be charged more for auto insurance coverage.

Types Of Risk: There are generally 3 types of risk that can be covered by insurance:
personal risk, property risk, and liability risk.

1. Personal risk: is any risk that can affect the health or safety of an individual, such
as being injured by an accident or suffering from an illness.
2. Property risk: is any risk that can cause a partial or total loss to property, such as
theft, fire, or so-called "acts of God".
3. Liability risk: is the personal or business risk associated with being found liable to
another because of negligence or willful acts that caused a loss to another's property or
person, such as injuring someone while driving under the influence of alcohol, or
because the insured failed to perform a duty, such as performing contractual obligations.
Health Insurance: Health insurance is a type of insurance coverage that pays for
medical, surgical, and sometimes dental expenses incurred by the insured. Health insurance
can reimburse the insured for expenses incurred from illness or injury, or pay the care provider
directly. It is often included in employer benefit packages as a means of enticing quality
employees, with premiums partially covered by the employer but often also deducted from
employee paychecks. The cost of health insurance premiums is deductible to the payer, and the
benefits received are tax-free.
 Health insurance is a type of insurance coverage that pays for medical and surgical
expenses incurred by the insured.
 Since 2010, the Affordable Care Act has prohibited insurance companies from denying
coverage to patients with pre-existing conditions and has allowed children to remain on
their parents' insurance plan until they reached the age of 26.
 Medicare and the Children's Health Insurance Program (CHIP) are two public health
insurance plans that target older individuals and children, respectively. Medicare also
serves people with certain disabilities.

Family Coverage: Family coverage is an insurance policy that covers an entire family.
Often, employers offer it as a benefit for their employees. Family coverage can include dental
insurance, health insurance, life insurance, accidental death and dismemberment insurance,
and more. Such plans may also be purchased outside of an employer network. The benefit of
family coverage is one policy insures the whole family. This means the family does not need to
shop for and purchase individual plans for every member. Spouses, dependent children, ex-
spouses, domestic partners, and dependents of domestic partners are all people who can
potentially qualify for family coverage. Many employers offer this kind of coverage because it
can be very appealing to employees who have families and could thus benefit substantially from
this arrangement.

New rules to protect policyholders: The insurance regulator has notified

new rules to protect policyholders' interests. It is definitely a big step towards
policyholder protection, but a lot remains to be done.
The Insurance Regulatory and Development Authority of India (Irdai) has notified new rules to
protect policyholder’s interest. You can read the full notification here. While the regulations work
towards ensuring that insurers settle all kinds of claims on time by defining the penalty on
delays, there is much left to be desired in addressing better disclosures for the customers. We
take you through some key provisions of the notification and also bring you experts’ views on
what more could have been included in it.
If an insurer delays claims payments, it has to pay a penalty that’s 2% over the bank rate, which
is specified by the Reserve Bank of India, as on 1 April of that fiscal. For instance: in life
insurance, after a claim is made, the insurer needs to ask for all the documentation within 15
days and take a decision on the claim and make the payment within 30 days. This is the norm
even now. And, if a claim has to be investigated further then the insurer gets up to 90 days for
investigating. If the insurer decides to pay, it has to do so within 30 days from when the decision
to pay was taken. Insurers will attract penalties for not adhering to these timelines. The
notification also clarifies that if a claim is ready for payment but the payment cannot be made
due to reasons of proper identification of the payee, the insurer will still pay a penalty. For
settlement for maturity proceeds and annuities, insurers have to notify the policyholder in
advance or send post-dated cheques or transfer money to the bank account so as to pay the
claim on or before the due date. For surrenders, free-look cancellations and withdrawal request,
the insurers will have to pay within 15 days of receiving the request, or the last necessary
document. A delay in this case will also invite penalty.
Structure Of Insurance Industry In Pakistan:

Insurance in Pakistan is regulated under the Insurance Ordinance, 2000.[1] In the past few
years, it has transformed into a developing and fast growing market that is generally divided into
three components: life insurance,[2] general insurance and health insurance.
The Government of Pakistan established the Department of Insurance in April 1948 as a
department of the Ministry of Commerce; the aim of this department is to take care of affairs
related to the insurance industry. Out of the 54% that Pakistan's service sector contributes to
the national GDP, insurance, along with transport, storage, communications and finance occupy
24% of the sector.
The insurance industry in Pakistan is relatively small compared to its peers in the region. The
insurance penetration and density remained very modest as compared to other jurisdictions
while the insurance sector remained underdeveloped relative to its potential. The Pakistani
insurance market has undergone major structural changes in last few years through mergers of
companies to meet the increased statutory requirement of minimum paid up capital as per
Insurance Ordinance 2000. Some companies who were unable to raise this capital have been
asked to close down their operations. The Security and Exchange Commission of Pakistan
(SECP), Insurance Division, is trying to improve the image of Pakistan Insurance Industry by
issuing directives on financial security and transparency, code of good governance and sound
market practice. The year 2015 showed improvement in Pakistan’s overall economic indicators
including containment of current account deficit, owing to continuing decline in international oil
prices along with an uplift in remittances from abroad. The successful issue of Sukuk Bond in
the international market also helped the foreign exchange reserves to swell to unprecedented
levels. China and Pakistan have made agreements to establish China Pakistan Economic
Corridor (CPEC) between the two countries. The corridor is expected to boost economy, trade
and connectivity of Pakistan with the regional countries. As part of CPEC, Pakistan has also
signed a series of energy projects with China, which will enable to overcome the energy crisis in
foreseeable future. The economy grew by 4.24% in fiscal year 2015 which is highest
achievement since 2008-2009. Inflation during the year has remained significantly low,
achieving the lowest levels since 2003. The services sector registered a growth of 5 percent
against the target of 5.2% but remained higher compared to the last year growth of 4.4%.

Right & Duties Of Insurance Company:

Consumer Rights: The Insurance Industry’s Code of Consumer Rights and
Responsibilities summarizes the core rights that consumers have when purchasing home, auto
or business insurance. These rights include the right to clear information about the coverage
and claims settlement process, and the right to information about how an insurance sales
representative is being paid. Consumers also have the right to resolve a complaint and the right
to privacy.

Consumer Responsibilities: As an insurance consumer, you also have

responsibilities. Your key responsibility is to share pertinent and timely facts about your car,
property and business with your insurer. Insurance is a contract. The insurer and the consumer
share the responsibility to act in good faith at all times in their dealings with each other.
POLICY HOLDER'S DUTIES AND RIGHTS:
Policy Holder's Duty:
It is the policyholders’ duty to:

 Provide all required information truthfully;

 Not to misstate or make false declaration;
 Complete the proposal form and nominate the beneficiary;
 Meet all documentary requirements at the time of taking out insurance policy;
 Make claim in accordance with policy provisions and follow the claim process;
 Complete all documentary requirements for recovering claim.

Policy Holder's Rights:

The insurance policyholder has the right to:

 Choose the insurance product he/she wants from the insurance company of choice. Do
not get under the undue influence or pressing persuasion from any insurance agent;
 Take quotes from multiple insurance companies and compare these to make any final
insurance purchase decision;
 Paying the insurance premium at any time until grace period expires;
 Shift his/her investments between various funds in a unit-linked insurance policy;
 Add the riders to his/her insurance policy at any time and get additional insurance
coverage;
 Ask for any valid benefit stipulated in the insurance policy document;
 Ask the insurance company to act in accordance with the written terms and conditions of
the insurance policy;
 Refuse to accept anything contrary to the insurance policy document provisions.
 Lodge compliant with the designated dispute resolution forum regarding
maladministration of the insurance company or its representative or agent.
 Surrender the cash value policy at any time and obtain underlying amount of the
insurance policy;
 Obtain a loan on the savings insurance policy as assignment.

Different Between Insurance & Assurance

Insurance Assurance

The objective of insurance is to reinstate the The objective of assurance is to pay the
financial position of the insured to his or her sum assured when the event takes place
previous position

Taken to prevent risk or provide against it Taken against an event, whose occurrence
is certain
Insurance is based on the principle of Assurance is based on the principle of
indemnity certainty

The tenure of insurance is generally less The tenure of assurance is more

The premium amount which is received is not
the investment in other investment avenues
to generate bonus
The premium received by the assurance
company is invested in other financial
instruments to generate investment bonus
will, in turn, increases the value of the
policy

Insurance can be car insurance, medical Assurance is generally related to whole life
insurance or any other kind of insurance insurance

Risk Management:
Most entrepreneurs are risk takers, willing to invest resources with an expectation and hope,
but no guarantee, of reward. But, from the viewpoint of insurance, "risk" is another word for
"peril" and refers to things that can go wrong. Crime, vandalism, fire, a personal injury lawsuit, a
computer virus, equipment breakdown, nondelivery of raw materials, death or illness of a key
employee—the list of adverse events which can cause economic harm to your business or
organization goes on.

Risk management is a broad topic. It involves taking steps to minimize the likelihood of things
going wrong, a concept known as loss control. It also involves the purchasing of insurance to
reduce the financial impact of adverse events on a company when, despite your best efforts,
bad things happen. No one likes thinking about what could go wrong. Nevertheless, as a
prudent manager, you should understand the risks your business faces. Until you identify risks,
you can’t make good decisions about managing them.

Risk Management Requires Leadership:

Risk management, particularly loss control, begins at the top of any organization. If the head of
company makes it a point to emphasize safety, compliance, and lawful and ethical behavior, the
rest of the organization is more likely to follow suit.

Risk management costs money, but the costs of not paying attention to safety concerns and not
purchasing insurance can be far higher in the long run than any front-end savings. While small
companies typically do not hire full-time risk managers, risk management should not be left to
chance. Specific individuals should be required to take responsibility for safety and compliance
programs as well as for insurance matters.

Resources For Risk Management:

Thanks to the Internet, all organizations have easy access to enormous amounts of information
on risk management, including loss control measures, safety, compliance and disaster
preparedness and recovery. Extensive checklists and suggestions of a general nature are
available as well information tailored to specific types of businesses. Check the resources
available from your insurance company.

One useful resource is your insurance agent. Invite the agent to tour your premises and discuss
how you are currently managing risks. He or she will be able to evaluate your actions and offer
suggestions.
Depending on the nature of your business, it may be a wise investment to engage a risk
management consultant.

Loss Control And Insurance:

Effective loss control—reducing the number and size of losses—may impact both the availability
and affordability of insurance.

A business that is indifferent to loss control may have a higher than average number of
insurance claims. A really poor loss history can make it difficult to find insurance. Conversely,
businesses that actively manage risks, and thereby control losses, will have fewer claims and
will often see those efforts rewarded with lower insurance premiums.

Preventing Fire Losses:

Over time, experts have identified the most frequent causes of loss and how to reduce the
extent of damage when accidents occur. Below are questions designed to help you decide
whether you need to take additional precautions to control the risk of fire.

 Are employees trained in fire safety? Do they know exactly what to do if a fire starts? Is
extra training given to those responsible for storage areas, housekeeping, maintenance
and operations where there are open flames or flammable substances are used or
stored?
 Do you have the right type, size and number of fire extinguishers? Your fire department
or fire protection equipment supplier can advise you. Are the fire extinguishers serviced
and tagged annually? Do you review with employees at least once a year where the fire
extinguishers are and how to use them?
 If needed, have you modernized your electrical system? Faulty wiring causes a large
percentage of nonresidential fires. Are electrical panels accessible, with at least three
feet of clearance and labeled? Except for temporary use (or surge protection for
sensitive electronics such as computers) electrical equipment should be plugged directly
into an outlet, rather than into extension cords.
 Have you situated your business in a fire-resistant building—a structure made of
noncombustible materials with firewalls (self-supporting solid walls running the full width
and height of the building) that create barriers to the spread of fires?
 Does your building have a fire alarm system connected to the local fire department or an
alarm company?
 Does your building have a sprinkler system to douse fires? If so, is it serviced, including
a main drain test, at least annually? Is your sprinkler system the right one for your kind of
building and the materials used in your business? Different types of buildings and
contents require different types of fire suppression systems. Your insurance carrier,
alarm company or local fire department can assist you in choosing the most appropriate
type of system.
 Have smoke detectors been installed, and are they regularly tested?
 Have you posted "No Smoking" signs? Do you enforce the rule? Is there evidence of
smoking?
 Do you regularly check your heating system?

Warranty Claim:
Warranty Claim means any liability for any warranty (including any warranty regarding altered
items or forged or missing endorsements) of Seller to another financial institution under
applicable law, including the Uniform Commercial Code, Regulation CC of the Federal Reserve
Board, Regulation J of the Federal Reserve Board, any Operating Circular of the Federal
Reserve Board, the rules or policies of any clearinghouse, and any other warranty provisions
promulgated under state, federal or other applicable law, relating to any draft, image deposit,
check, negotiable order of withdrawal or similar item drawn on or deposited and credited to a
Deposit account.

Warranty Claim means a claim made by either the Assignee or the Assignor based on or with
respect to the inaccuracy or non-performance or non-fulfilment or breach of any representation,
warranty or covenant made by the other party contained in this Agreement or contained in any
document or certificate given in order to carry out the transactions contemplated hereby.

Principles of Insurance:
Defining an insurance contract can be very beneficial when you are negotiating or deciding if
you need a lawyer in your personal injury case. There are seven basic principles that create
an insurance contract between the insured and the insurer:

1. Utmost Good Faith

2. Insurable Interest
3. Proximate Cause
4. Indemnity
5. Subrogation
6. Contribution
7. Loss Minimization

These 7 principles combine to form an insurance contract. In this blog we are going to briefly
explain each item and try to show you how understanding each item can shed light into your
personal injury case and insurance questions. These are principles open to interpretation. So if
you think your case has breached one of these principles or your insurance claim has wrongfully
been denied. Jason McMinn and Justin McMinn for help understanding your rights.

Being able to understand these 7 principles will give you the tools you need to advocate for your
rights,

The Principle of Utmost Good Faith:

Both parties involved in an insurance contract—the insured (policy holder) and the insurer (the
company)—should act in good faith towards each other.

The insurer and the insured must provide clear and concise information regarding the terms and
conditions of the contract

This is a very basic and primary principle of insurance contracts because the nature of the
service is for the insurance company to provide a certain level of security and solidarity to the
insured person’s life. However, the insurance company must also watch out for anyone looking
for a way to scam them into free money. So each party is expected to act in good faith towards
each other.

If the insurance company provides you with falsified or misrepresented information, then they
are liable in situations where this misrepresentation or falsification has caused you loss. If you
have misrepresented information regarding subject matter or your own personal history, then
the insurance company’s liability becomes void (revoked).

See how a social media post could ruin a personal injury case.
The Principle of Insurable Interest:
Insurable interest just means that the subject matter of the contract must provide some financial
gain by existing for the insured (or policyholder) and would lead to a financial loss if damaged,
destroyed, stolen, or lost.

The insured must have an insurable interest in the subject matter of the insurance contract.

The owner of the subject is said to have an insurable interest until s/he is no longer the owner.

In auto insurance, this will most times be a no brainer, but it does lead to issues when the
person driving a vehicle doesn’t own it. For instance, if you are hit by a person who isn’t on the
insurance policy of the vehicle, do you file a claim with the owner’s insurance company or the
driver’s insurance company? This is a simple but crucial element for an insurance contract to
exist

The Principle of Indemnity:

Indemnity is a guarantee to restore the insured to the position he or she was in before
the uncertain incident that caused a loss for the insured. The insurer (provider) compensates
the insured (policyholder).

The insurance company promises to compensate the policyholder for the amount of the loss up
to the amount agreed upon in the contract.

Essentially, this is the part of the contract that matters the most for the insurance policyholder
because this is the part of the contract that says she or he has the right to be compensated or,
in other words, indemnified for his or her loss.

The amount of compensation is in direct proportion with the incurred loss. The insurance
company will pay up to the amount of the incurred loss or the insured amount agreed on in the
contract, whichever is less. For instance, if your car is inured for $10,000 but damages are only
$3,000. You get $3,000 not the full amount.

Compensation is not paid when the incident that caused the loss doesn’t happen during the time
allotted in the contract or from the specific agreed upon causes of loss (as you will see in The
Principle of Proximate Cause). Insurance contracts are created solely as a means to provide
protection from unexpected events, not as a means to make a profit from a loss. Therefore, the
insured is protected from losses by the principle of indemnity, but through stipulations that keep
him or her from being able to scam and make a profit.

The Principle of Contribution:

Contribution establishes a corollary among all the insurance contracts involved in an incident or
with the same subject.

Contribution allows for the insured to claim indemnity to the extent of actual loss from all the
insurance contracts involved in his or her claim.

For instance, imagine that you have taken out two insurance contracts on your used
Lamborghini so that you are covered fully in any situation. Let’s say you have a policy with
Allstate that covers $30,000 in property damage and a policy with State Farm that cover
$50,000 in property damage. If you end up in a wreck that causes $50,000 worth of damage to
your vehicle. Then about $19,000 will be covered by Allstate and $31,000 by State Farm.
This is the principle of contribution. Each policy you have on the same subject matter pays their
proportion of the loss incurred by the policyholder. It’s an extension of the principle of indemnity
that allows proportional responsibility for all insurance coverage on the same subject matter.

The Principle of Subrogation:

This principle can be a little confusing, but the example should help make it clear. Subrogation
is substituting one creditor (the insurance company) for another (another insurance company
representing the person responsible for the loss).

After the insured (policyholder) has been compensated for the incurred loss on a piece of
property that was insured, the rights of ownership of this property go to the insurer.

So lets say you are in a car wreck caused by a third party and your file a claim with your
insurance company to pay for the damages on your car and your medical expenses. Your
insurance company will assume ownership of your car and medical expenses in order to step in
and file a claim or lawsuit with the person who is actually responsible for the accident (i.e. the
person who should have paid for your losses).

The insurance company can only benefit from subrogation by winning back the money it paid to
it’s policyholder and the costs of acquiring this money. Anything paid extra from the third party,
is given to the policyholder. So lets say your insurance company filed a lawsuit with the
negligent third party after the insurance company had already compensated you for the full
amount of your damages. If their lawsuit ends up winning more money from the negligent third
party than they paid you, they’ll use that to cover court costs and the remaining balance will go
to you.

The Principle of Proximate Cause:

The loss of insured property can be caused by more than one incident even in succession to
each other.

Property may be insured against some but not all causes of loss.

When a property is not insured against all causes, the nearest cause is to be found out.

If the proximate cause is one in which the property is insured against, then the insurer must pay
compensation. If it is not a cause the property is insured against, then the insurer doesn’t have
to pay.

When buying your insurance policies, you will most likely go through a process where you select
which instances you and your property will be covered for and which ones they will not. This is
where you are selecting which proximate causes are covered. If you end up in an incident, then
the proximate cause will have to be investigated so that the insurance company validates that
you are covered for the incident.

This can lead to disputes when you have suffered an incident you thought was covered but your
insurance provider says it’s not. Insurance companies want to make sure they are protecting
themselves but sometimes they can use this to get out of being liable for a situation. This might
be a dispute where you’ll need a lawyer to help argue for you.

The Principle of Loss Minimization

This is our final principle that creates an insurance contract and the most simple one probably.
In an uncertain event, it is the insured’s responsibility to take all precautions to minimize the loss
on the insured property.

Insurance contracts shouldn’t be about getting free stuff every time something bad happens.
Therefore, a little responsibility is bestowed upon the insured to take all measures possible to
minimize the loss on the property. This principle can be debatable, so call a lawyer if you think
you are being unfairly judged under this principle