Legal Concept of Insurance

Legal concept of insurance.

A contract of insurance is an agreement by which one party (the insurer) for a consideration paid (insurance premium) by the other party (the insured or assured), promises to pay money or its equivalent or to do some act valuable to the latter (or his nominee), upon the happening of a loss, damage, liability, or disability arising from an unknown or contingent event.
In general, an insurance contract is a promise by one person to pay another, money or any other thing of value upon the happening of a fortuitous event beyond the effective control of either party in which the promisee has an interest apart from the contract. (Edwin W. Patterson, Essentials of Insurance Law, p.10, 1957 ed., published by McGraw-Hill Book Co., Inc.)

Insurance and the legal doctrine of subrogation.

The insurance company or industry offers protection against losses resulting from a variety of perils. When individuals and businesses or companies purchase insurance policies, they can receive reimbursement for losses due to accidents, property loss due to theft, and fire and damages due to force majeure and other natural calamities, hospitalization and other medical expenses, and loss of income due to disability or death.

The legal doctrine of subrogation is basically a process of legal substitution whereby the insurer steps into the shoes of the insured so that the former acquires the rights of the latter against the person who caused the loss or against the event which caused the destruction of the property insured against.