The Law of Insurance-1938

Duties of the policy-holder

 

The insured has the following duties:

1)(1) Disclosure- the policy holder must disclose all material facts. The statement of facts made by him in the proposal form must be correct.

2)(2) Premium- the policy holder must pay the premium on the due dates.

3)(3) Protection- in the case of fire, marine and other forms of insurance of property, the policy holder must take reasonable measures for the protection of the property. 

(4) Mitigation of loss- In case of accident or mischance it is the duty of the policy holder to take steps for reducing the loss as much as possible. For example, when fire occurs the policy holder must safeguard the burnt properties.

(5) No commission- the policy holder is not allowed to receive any part of the commission payable on the policy or any rebate on the premium. If he accept any such payment he may be punished with a fine which may extend to Tk 500. 

 

Double Insurance

 

When the same risk and the same subject matter is insured with more than one insurer, there is said to be double insurance. P, the owner of a house, insurance it again fire for Tk 30,000 with X and Tk 10,000 with Y. This is double insurance.

The following rules apply in cases of double insurance:

i)(a) Life insurance- in case of life insurance there may be any number of policies for any amount.

ii)(b) Property-not more than actual loss- a person is free to ensure his property with any number of insurances. But in case of loss occurring he will not be allowed to recover more than the actual loss from all the insures together.  

(c) No profit- the insured is never allowed to make profit out of a fire or any other mischance.

P, the owner of a house, insurance it again fire for Tk 30,000 with X and Tk 10,000 with Y. This is double insurance. If the actual loss of the house is found to be Tk 20,000, the insurers will pay, in case of total loss by fire, only Tk 20,000.

This amount will be shared in proportion to the value of each insurers policy. 

 

Reinsurance

Reinsurance means the transfer of a part of the risk by the insurer.

Suppose that a ship has been insured for Tk 10 lacks. The insurer may feel that the risk is too heavy to be borne by himself alone. If so he can transfer a part of the risk to another insurer. 

 

Rights of re-insurers:

•Re-insurer is entitled to get a proportionate part of the premium.

•Re-insurer gets the benefits of the conditions and terms of the original policies.

•Re insurer is entitled to subrogation.

•If for any reason the original policy lapses, the reinsurance come to an end.