GENERAL PRINCIPLES OF INSURANCE CHAPTER 3

PRINCIPLE OF INSURABLE INTEREST TO DIFFEENTIATE BETWEEN INSURANCE AND GAMBLING SUBJECT MATTER OF INSURANCE SUBJECT MATTER OF CONTRACT INSURANCE

POLICY HOLDER MUST HAVE SIGNIFICANT RELATIONSHIP WITH THE PROPERTIES OR INDIVIDUAL POLICYHOLDER GETS: SUBJECT MATTER BENEFIT PROPERTY AND INVIDUAL IN GOOD & PERFECT CONDITION, SAFE AND SOUND

POLICYHOLDER GETS: SUBJECT MATTER LOSS OR DISADVANTAGE IF SOMETHING BAD HAPPENED ON PROPERTIES / INDIVIDUAL

OBJECTIVE OF INSURABLE INTEREST To avoid gambling To decrease moral hazard To enable the insurers determine amount of losses

When Insurable Interest exists General insurance – at the beginning and at the time of loss Life insurance – at the beginning of contract only

WHO HAS A RIGHT OF INSURABLE INTEREST??? GENERAL INSURANCE

LIFE INSURANCE

PRINCIPLE OF UTMOST GOOD FAITH ORDINARY COMMERCIAL CONTRACT Tidak mengkehendaki pihak terlibat memberitahu maklumat yang tidak diminta Hasil terbaik asalkan tidak mengelirukan prinsip undang-undang – caveat emptor (pembeli harus berhati-hati) INSURANCE CONTRACT -Pencadang (insured) menngetahui atau harus mengetahui tentang risiko yang dicadangkan itu Insurer tidak boleh buat penilaian yang tentang risiko tersebut kecuali pihak pencadang bersedia untuk memberi maklumat matan PROPOSAL FORM

DUTY OF UTMOST GOOD FAITH Tugas untuk menyatakan secara lengkap dan tepat semua fakta matan berkaitan dengan risiko yang dicadangkan yang dalam pengetahuan pencadang atau sepatutnya diketahui oleh pencadang samada ditanya atau tidak

AKTA INSURANS 1996 – subseksyen 150 menekankan tanggungjawab utmost good faith

MATERIAL FACTS ARE TO BE DISCLOSED BY THE INSURED A FACT WHICH WILL INFLUENCE A PRUDENT UNDERWRITER IN DECIDING THE ACCEPTANCE OF THE RISK OR PREMIUM TO BE CHARGED

Duration of duty to disclose THE PROPOSER IS REQUIRED TO DISCLOSE MATERIAL FACTS DURING NEGOTIATION THE RESPONSIBILITY TO EXPOSE MATERIAL FACTS IS HELD UNTIL THE IMPLEMENTATION OF THE CONTRACT

BREACHES OF UTMOST GOOD FAITH fails to disclose the material fact misrepresents the material fact NON DISCLOSURE MISREPRESENTATION BREACH OF UTMOST GOOD FAITH VOIDABLE CONTRACT

INDEMNITY DEFINITION OBJECTIVE EFFECTS OF THE PRINCIPLE

INDEMNITY Definition : Prinsip yang mengkehendaki insurer supaya meletakkan insured di dlm keadaan kewangan yang sama seperti sebelum berlaku kerugian Objective : supaya insured selepas dibayar pampasan tidak berada di dalam keadaan yg lebih baik daripada sebelum kerugian itu terjadi.

..samb. Effect : Insured tidak boleh menerima jumlah yang lebih daripada amaun kerugian yg dialami walaupun ia mungkin menerima jumlah yang kurang daripada jumlah kerugian disebabkan oleh pembatasan pd polisi.

Menyatakan pemegang insurans tidak sepatutnya memperoleh keuntungan drpd pampasan yg dituntut ke atas kerugian yg diinsuranskan dgn sy. Insurans Hanya setakat dipulihkan kpd kedudukan kewangan asal sbgmn sblm mengalami kerugian.

Main purpose of the indemnity: To prevent policy holder to gain profit via insurance To decrease moral hazard among the policyholder

…samb. KONTRAK INSURANS AM IALAH KONTRAK INDEMNITI kecuali KONTRAK INSURANS KEMALANGAN DIRI KONTRAK INSURANS HAYAT BUKAN KONTRAK INDEMNITI Sebab : sebarang yg melindungi nyawa, anggota badan dan fizikal seseorang, prinsip indemniti tidak digunapakai.

Settlement channels of indemnity : Class of indemnity Indemnity measurement Examples Property Kos gantian – susutnilai / harga pasaran Insurans kereta, insurans Liabilities Keputusan Mahkamah + kos perbelanjaan Pecuniary Kerugian kewangan Insurans jaminan kewangan Settlement channels of indemnity : CASH, REPAIR, REPLACEMENT, REINSTATEMENT

INDEMNITY EXCEPTIONS valued policy valued policy law replacement cost insurance life insurance

SUBROGATION PRINSIP SUBROGASI MEMBOLEHKAN INSURER YANG TELAH MEMBAYAR INDEMNITI KEPADA INSURED ATAS SEBARANG KERUGIAN MEMPERGUNAKAN HAK INSURED UNTUK MENUNTUT AMAUN YANG DIKELUARKANNYA DRPD PIHAK KETIGA. WUJUD AGAR INSURED TIDAK AKAN MENDAPAT LEBIH DARI DUA CARA UNTUK DIA MEMPEROLEHI JUMLAH KERUGIAN ITU.

LOSSES TO THE INSURED CAUSED BY THE THIRD PARTY DOES THE INSURED CAN CLAIM FROM THE 3RD PARTY NO INSURED CAN CLAIM FROM THE INSURER INSURER CAN GET SUBROGATION RIGHT YES INSURED CANNOT CLAIM FROM THE INSURER INSURER CLAIMS FROM THE 3RD PARTY CASE SETTLED CASE SETTLED

HOW DOES SUBROGATION ARISE? SUBROGATION ARISING OUT OF TORT KECUAIAN YG DILAKUKAN OLEH PIHAK KETIGA SEHINGGA MEROSAKKAN/MENGHILANGKAN HARTA BENDA YANG DILINDUNGI DALAM POLISI,INSURED BERHAK MENERIMA BAYARAN INDEMNITI DAN JUGA BERHAK MENUNTUT KERUGIAN DR PIHAK KETIGA.

SUBROGATION ARISING OUT OF CONTRACT INSURED MUNGKIN MENGALAMI KERUGIAN YANG TIDAK DILINDUNGI DI BAWAH POLISI TETAPI DI BAWAH KONTRAK ANTARA INSURED DAN PIHAK KETIGA INSURED MENDAPAT GANTIRUGI SAMADA DARI INSURER ATAU PIHAK KETIGA

SUBROGATION ARISING OUT OF STATUtE KADANGKALA STATUT MEMBENARKAN SESEORANG ITU MENUNTUT BAYARAH KERUGIAN DARIPADA PIHAK KETIGA CONTOH AKTA INNKEEPERS 1952 (AKTA RUMAH TUMPANGAN)

SUBROGATION ARISING OUT OF THE SUBJECT MATTER APABILA INSURED MENGALAMI KEMUSNAHAN KESELURUHAN HARTA BENDANYA, INSURER AKAN MEMBAYAR KERUGIAN MENYELURUH KEPADA INSURED SLPS INSURER MEMBAYAR TUNTUTAN ITU, IA BERHAK MEMPEROLEHI BAKI YG TINGGAL DR PERKARA POKOK/SALVAJ YG ADA

CONTRIBUTION DUA POLISI ATAU LEBIH APABILA KERUGIAN DILINDUNGI DI BAWAH DUA POLISI ATAU LEBIH PRINSIP SUMBANGAN MEMBENARKAN INSURER YANG TELAH MEMBAYAR INDEMNITI KPD INSUREDMEMANGGIL INSURER YANG TERLIBAT SUPAYA MEMBUAT SUMBANGAN BAYARAN INDEMNITI MENGIKUT BAHAGIAN MASING- MASING MERUPAKAN CABANG INDEMNITI KEWUJUDANNYA UNTUK MENGELAK INSURED MEMPUNYAI DUA POLISI ATAU LEBIH YANG MELINDUNGI KERUGIAN YG SAMA DRPD MENERIMA LEBIH DARI AMAUN KERUGIAN

ESSENTIAL OF CONTRIBUTION TO APPLY THE PRINCIPLE, THE FOLLOWING CONDITIONS HAVE TO BE FULFILLED: 1. TWO OR MORE POLICIES OF INDEMNITY MUST BE IN FORCE 2. THE POLICIES MUST BE COVER A COMMON INTEREST 3. THE POLICIES MUST COVER A COMMON PERIL WHICH GIVES RISE TO THE LOSS 4. THE LOSS MUST INVOLVE A COMMON SUBJECT MATTER COVERED BY THE POLICIES

PROXIMATE CAUSE Onus of proof of loss rests on the insured Which among the many causes of losses can be taken to be the dominant cause of loss?

…samb. THE INSURER WILL NOT LIABLE FOR A LOSS CAUSED BY EITHER AN UNINSURED PERIL OR EXCLUDED PERIL A PROBLEM ARISES WHEN THE TWO OR MORE CAUSES INVOLVED ARE BOTH INSURED PERILS & EXCLUDED PERILS TO RESOLVE THIS DIFFICULTY USES DOCTRINE PROXIMATE CAUSE -“CAUSA PROXIMA NON REMOTE SPECTATUR”(LATIN MAXIM)

THE INSURER’S LIABILITY UNDER CONCURRENT CAUSES SINGLE EVENT INSURED PERIL LIABILTY IN FULL UNINSURED/ EXCLUDED PERIL NO LIABILITY CHAIN OF EVENTS NO EXCLUDED PERILS EFFECTS SEPARATE LIABILITY IN RESPECT OF INSURED PERIL ONLY EFFECT UNSEPARABLE FULL LIABILITY CHAIN OF EVENTS + EXCLUDED PERILS EFFECTS SEPARABLE EFFECTS UNSEPARABLE THE INSURER’S LIABILITY UNDER CONCURRENT CAUSES

Points to remember: INSURED PERIL EXCLUDED PRIL UNINSURED PERIL

1 CONCURRENT CAUSE PERILS SEPARATED EFFECT OF LOSS INSURER LIABLE INSURED PERIL + UNINSURED PERIL + NO EXCLUDED PERIL 1 INSURER LIABLE FOR LOSS OF INSURED PERIL

1 CONCURRENT CAUSE NON SEPARATED EFFECT PERILS OF LOSS INSURER LIABLE INSURED PERIL + UNINSURED PERIL + NO EXCLUDED PERIL 1 INSURER LIABLE FOR FULL AMOUNT OF LOSS

CONCURRENT CAUSE 1 PERILS SEPARATED EFFECT OF LOSS INSURER LIABLE INSURED PERIL UNINSURED PERIL 1 INSURER LIABLE ONLY LOSS CAUSES BY INSURED PERIL EXCLUDED PERIL

CONCURRENT CAUSE 1 PERILS NO SEPARATED EFFECT OF LOSS INSURER WILL NOT INSURED PERIL UNINSURED PERIL 1 INSURER WILL NOT LIABLE FOR THE LOSS EXCLUDED PERIL

CHAIN OF EVENTS UNBROKEN CHAIN OF EVENTS INSURER WILL BE LIABLE FOR THE LOSS INSURED UNDERTHE POLICY NO EXCLUDED PERIL PRECEDES AN INSURED PERIL

EXAMPLE 1 NO EXCLUDED PERIL IS INVOLVED INSURER IS LIABLE FOR ANY LOSS DUE TO FIRE AND LOSSES RESULTING FROM WATER OF FIREFIGHTERS FIRE POLICY CATCHES FIRE DUE TO SHORT CIRCUIT (UNISURED PERIL)

EXAMPLE 2 NO EXCLUDED PERIL IS INVOLVED A LIFE ASSURED IS KNOCKED DOWN BY A VEHICLE AND DIES ACCIDENT COLLISION RESULTING DEATH IS PROXIMATE CAUSE THE INSURER IS LIABLE

EXAMPLE 1 EXCLUDED PERIL IS INVOLVED AFTER BEFORE FIRE POLICY INSURER NOT LIABLE FOR THE LOSS GAS TANK EXPLODES (COMMERCIAL PURPOSE) (EXCLUDED PERIL) BOOM FIRE (INSURED PERIL) INSURER LIABLE FOR THE LOSS BEFORE THE EXPLOSION FIRE (INSURED PERIL) GAS TANK EXPLODES (COMMERCIAL PURPOSE) (EXCLUDED PERIL)

EXCLUDED PERIL IS INVOLVED EXAMPLE 2 EXCLUDED PERIL IS INVOLVED

EXCLUDED PERIL IS INVOLVED EXAMPLE 1 EXCLUDED PERIL IS INVOLVED

EXCLUDED PERIL IS INVOLVED EXAMPLE 2 EXCLUDED PERIL IS INVOLVED

EXCLUDED PERIL IS INVOLVED EXAMPLE 2 EXCLUDED PERIL IS INVOLVED COMMIT SUICIDE IS EXCLUDED PERIL SO THAT INSURER DOES NOT LIBLE TO THE LOSS EVEN AFTER ONE YEAR HE TOOK WHOLE LIFE ASSURANCE POLICY

BROKEN CHAIN OF EVENTS IF THERE IS BROKEN CHAIN OF EVENTS, THE PROXIMATE CAUSE OF LOSS IS THE ONE IMMEDIATELY FOLLOWING THE LAST INTERRUPTION

EXAMPLE 1 PERSONAL ACCIDENT POLICY

EXAMPLE 1 PERSONAL ACCIDENT POLICY

EXAMPLE 1 PERSONAL ACCIDENT POLICY

EXAMPLE 1 PERSONAL ACCIDENT POLICY HEART ATTACK

EXAMPLE 1 PERSONAL ACCIDENT POLICY DROWNED THE INSURER IS LIABLE TO PAY THE BENEFITS UNDER THE PERSONAL ACCIDENT POLICY