Characteristics of Insurance

Insurance is the co-operative device which is used to spread a loss caused by particular risk over some persons who’re exposed in it and who have agreed to insure against the risk. the risk is an uncertainty of a financial loss. It shouldn’t be confused with a chance of a loss which is a probable loss out of the given number of the exposures. It shouldn’t be confused with the peril which is a cause of the loss or with the hazard that is the condition that can increase chances of a loss.
Characteristics of the Insurance
Since the insurance is the contract, so, it is required to be written and also contain some features. Here are some important characteristics of an insurance.
The Agreement Enforceable in the Law
The insurance is the agreement that is enforceable in the law. It can’t be otherwise. It’s the non-transferable for example agreement that has to satisfy all essentials of the contact, which is, the parties that are in contact are required to be competent to go into contract. Actually, they freely agree and then give their consents, they are required to accept for the legal consideration and the lawful objectives of all the legal formalities that are required to be completed.
The Two Parties –Insurer and Insured
The insurance contract is required to have the parties. An insurer who have accepted to compensate the specified event/events, it takes place and an insured who admitted to paying a consideration as the agreed upon by all terms and the conditions of an insurance contract.
The Utmost Good Faith
In insurance, contact an insured is liable legal to disclose all materials facts to an insurer. It’s on this base an insurer agrees to be compensated to cover the risk. Nothing is required to be concealed. When something has been concealed, an insurer can back out to a place which the utmost good faith principle was not followed to by an insured.