Essentials of Insurance

Essentials of Insurance

What are the legal matters that you need to learn about insurance before choosing one and binding yourself in the contract of insurance? This guide will help you better understand insurance before giving in to the words of an insurance agent who is obviously trying to sell you something but does not explain the legal implications of the contract of insurance. Knowing gives you in a better position to make good judgment than jumping hastily into the unknown.

Definition of terms.

Insurance [15th century, Old French enseurance] is the financial protection against loss or harm or an arrangement by which the insurance carrier or the insurer provides the assured or insured financial protection against loss or harm, or illness, in return for payment of what is known as the insurance premium.

Contract of insurance: a written contract between an insurance company and a person or organization requiring insurance against loss or harm.

The insurance policy sets out the terms and conditions of the agreement, specifying the risks for which compensation or costs will be paid.


Origin of Insurance

Insurance is based upon the principle of aiding another from a loss caused by an unfortunate event. It is believed that mutual insurance is as old as society itself. In ancient time in Egypt, China, Rome and India, benevolent societies have organized for the purpose of extending aid to their unfortunate members from a fund contributed by all as early as 300 B.C.

Insurance is one of the modern inventions wherein its practice as an important agency in promoting commercial and industrial transactions has originated among the Italian cities in the early middle ages among merchants engaged in shipping business for distributing among mutual contractors, the loss falling upon any one by reason of the perils of navigation. It can be gleaned that out of the maritime practice and laws governing the same, the laws of insurance was part of the general law merchant and has assumed an international character.