INSURANCE AS PECULIAR SPECIE OF THE LAW OF CONTRACT
Insurance is an intricate economic and social device for the handling of risks to life and property. It is social in nature because it represents the various individuals for mutual benefits by combining together funds to reduce the consequence of similar risks. The purpose of Insurance cannot however be farfetched as this can easily be seen from the various definition of Insurance, Insurance Contract has been define in the case of PRUDENTIAL INSURANCE COMPANY .V. INLAND REVENUE COMMISSIONER1 AS “a contract whereby a person called the “insured” undertakes in return for the consideration called the premium to pay another called the “assured” a sum of money or its equivalent on the happening of a specified event. But simply put, Insurance is the placing back of a person who has suffered a loss in the same position he was before loss occurred. It’s aims to eradicate the consequence of a loss by not allowing the victim [insured] to suffer the consequential loss.
This project work examines the basic principles of Insurance Law, these principles are numerous and they are the basis upon which an Insurance.
1. (1904) 2 K.B. 658
Contract are based failure to adhere to any of these principles may render an Insurance Contract void, the need to understand as well as having a sound knowledge of the basic principles of Insurance Contract cannot be overemphasized.
These basic principles as would be discuss in this work include:
Utmost good faith.
The aforementioned principles are the bedrock of Insurance Contract, the absence of any of which the purpose of insurance will be defected. However, as earlier stated unless one meets the requirements of all the basic principle of insurance, he will be estopped from claiming under an insurance contract.
1.1.0 BACKGROUND TO THE STUDY
Insurance Law arises from Maritime Contract around 1350 which has since extended into other areas and today it has covered almost all aspect transactions in the world.
But due to the high level of illiteracy in our society, many people are unaware of the Insurance policies but with the enactment of the Insurance Act No 68 of 2003, the awareness of Insurance policies was enhanced, thus more people took steps to insure their properties or life but unfortunately, much as the high percentage of them normally ends up unable to have their claims indemnified either as a result of a breach of one Insurance principle or another.
The motive for writing this work is the difficulty often encountered by many people when it comes to Insurance Contract, they are often gripped with the fear of having to combats with risk, but in reality every human being is faced with risks, personal or otherwise and the possibility of risks happening appear relevant at any moment, sometimes imminent, even though it may not happen for many years to come. This is however caused by the low awareness of the understanding of the basic principles of Insurance Contract.
However, in other to make people patronize the Insurance companies very well, there is the need to make people understands the distinctive Insurance principles and its peculiarity from Law Of Contract, these has however necessitated the writing of this project work.
1.2.0: OBJECTIVES OF THE STUDY
As Insurance is an intricate economic and social device for handling of risks to life and property. This work seeks to:-
To make seemingly difficult and intricate Insurance terminologies easy and understandable so that people can correctly appreciate what insurance is all about, use and apply them in their daily life experience.
To enlighten the general public about the area of Insurance which though seems insignificant yet is the basis of the Insurance Contract.
To explain the basic distinction between the Insurance Contract and the law of Contract by elaborating on the basic principles of Insurance Law which include indemnity, subrogation,
To increase the level of education of insurance education. Hence it analysis the fundamental and basic principles that Insurance Contract deals with.
To enlighten people about the importance of having Insurance in our ever growing dynamic world.
1.3.0 FOCUS OF THE STUDY
As Insurance Contract is basically governed by the rules which form part the general Law of Contract but over the years it has attracted many principles of its own that it can be proper to speak of a Law of Insurance. However, this study is set to examine the distinctions between the Insurance Contract and the Law of Contract by showing the distinctive features of Insurance Contract, and, overview similarities between the Insurance Contract and that of Law of Contract will be examined.
SCOPE OF THE STUDY
This study will cover a whole lot of areas which includes the various definition and historical evolution of both Insurance Law and the Law Of Contract, it will also cover the similarities between the Insurance Law and the Law Of Contract which is usually refers to as the Insurance Contract, finally, it will critically examines the peculiarities between the Insurance Contract and the law of contract by discussing the distinctive features of Insurance Law.
For this project work to achieve its aims and objectives, information and hypothesis will be based on both primary and secondary source. Primary source to be used include legislative enactment such as the Insurance Act of 2008, other primary sources include decided cases from both within and outside the country. Secondary sources to be use in this work include textbooks written by different authors on insurance law and the law of contract, also article from newspaper and the internet.
Although, many foreign books did not treat the topic of this project in details except one of its concept insurable interest. Most Nigerian author however lightened the burden of this work with their tactful treatment of the basic principles of Insurance law. Important among the author in this regards include
IRUKWU. J.O. In his book Principle of Insurance Law where he explained in details the basic features of Insurance law. But although, Irukwu on this subject has principles laid down before the now operating Insurance Act in Nigeria, some of these principles remain in conformation with the Insurance Act of 2008.
BIRDS. In his book “Modern Insurance Law” also laid more emphasis on the basic principles of Insurance law which will help immensely in the treatment of this study.
PROF. OLUSEGUN YEROKUN in his book Insurance law in Nigeria serves as a major source of material for this work, as is book contains recent cases reported and these cases have enriched the law in so many ways, the book neatly explained the distinctive principles of insurance contract and also the similarities between the insurance law and the law of contract which is always referred to as the insurance contract Similarly, his book the Law of Contract which is meant for all law of contract student also serve as a major source of material for this work.
FUNMI ADEYEMI also in her book Nigeria Insurance Law wrote quite on the issue of Insurance contract. He observed the definition of insurance law, its types and also the contractual requirements of insurance contract. The book also went further to explain the basic principle of Insurance which has helped to make the project work an updated one also.
Similarly, to make this project an updated one, regards is made to the note given by DR SHITTU BELLO Esq. to his students of the University of Ilorin, when he was a lecturer with the school. The note provides meanings to some insurance terminologies as will be use in this project work.
However, all these authors and their book fails to discuss the principles of Insurance Contract as distinct from that of any other types of Contract which as necessitated the writing of this project work.
1.7.0: DEFINITION OF TERMS
INSURED: This refers to as a person who is covered by Insurance. Simply put a person or property which has been covered by an insurance policy which could be either properties or lives.
ASSURED: – This refers to the second party in an Insurance Contract, This party is usually an Insurance company which deals in risk.
PREMIUM: – This describes the consideration given by the insured in return for the insurers undertaking to cover the risk insured against in the policy of insurance.
PHYSICAL HAZARD: – This is the physical or tangible aspect of the risk. It has effect on the likelihood of occurrence of and severity loss.
MORAL HAZARD: – This defines the attitude and conduct of the person connected with the risk and the society at large. Examples include submission of false or over estimated claim.
THIRD PARTY: – There are two parties to an Insurance Contract, the insurer and the insured. All other are strangers to the contract and are referred to as the third parties because they are not parties to the Insurance Contract between the insured and the insurer.
CLAIMS: – It is a demand for something considers ones due, i.e. a request for the compensation under the terms of an Insurance policy. Simply put a request (money) under the terms of an insurance policy.
This chapter has been able to explain what this project work is meant for, its aims and objective, the general overview of what is expected in this study, and also has been able to define those terms which are expected to be used in this project to make it a success. It has also gone further to enumerate the names of books and their authors that will be used in this study to make it an updated and a successful one. It is social in nature because it represents the various individuals for mutual benefits by combining together funds to reduce the consequence of similar risks. The purpose of Insurance cannot however be farfetched as this can easily be seen from the various definition of Insurance, Insurance Contract has been define in the case of PRUDUENTIAL INSURANCE COMPANY .V. INLAND REVENUE COMMISSIONER AS “a contract whereby a person called the “insured” undertakes in return for the consideration called the premium to pay another called the “assured” a sum of money or its equivalent on the happening of a specified event. But simply put, Insurance is the placing back of a person who has suffered a loss in the same position he was before loss occurred. It’s aims to eradicate the consequence of a loss by not allowing the victim [insured] to suffer the consequential loss.