Law of Insurance
"The law of insurance is contained in the insurance ordinance, 2000. it extends to the whole of Pakistan. The Securities and Exchange Commission of Pakistan will implement this law"
Definition of Insurance
Insurance is a means to spread the loss caused by particular risk, over a number of people against some amount called premium.
Insurance creates a fund under which many persons contribute some money called the premium, out of which one party undertakes, against premium, to pay to the other party a certain amount on the happening of a certain event.
A contract of insurance is a conditional contract. The general principles of the law of contract apply to it. It is a valid contract. It comes into existence by the offer in the form of proposal and its acceptance. The object of the contract must not be immoral or illegal.
1. Insurer
The Party which promises to pay a certain sum of money to the other party is called the insurer (insurance company).
2. Insured
The party to whom certain sum of money is paid is called the insured (policy-holder).
3. Policy
The document containing the terms and conditions of the contract of insurance is called a policy.
4. Premium
The consideration, which the insured has to pay to the insurer for the protection given to him is called premium.
5. Policy Amount
The amount for which a policy is issued is known as policy amount.
6. Subject Matter
The thing or property insured is called the subject matter of Insurance.
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