CHAPTER 3

1. CHAPTER 3 GENERAL PRINCIPLES OF INSURANCE

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

3. POLICY HOLDER MUST HAVE SIGNIFICANT RELATIONSHIP WITH THE PROPERTIES OR INDIVIDUAL

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

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

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

8. LIFE INSURANCE

9. PRINCIPLE OF UTMOST GOOD FAITH • ORDINARY COMMERCIAL CONTRACT • Tidakmengkehendakipihakterlibatmemberitahumaklumat yang tidakdiminta • Hasilterbaikasalkantidakmengelirukan • prinsipundang-undang – caveat emptor (pembeliharusberhati-hati) • INSURANCE CONTRACT • -Pencadang (insured) menngetahuiatauharusmengetahuitentangrisiko yang dicadangkanitu • Insurer tidakbolehbuatpenilaian yang tentangrisikotersebutkecualipihakpencadangbersediauntukmemberimaklumatmatan • PROPOSAL FORM

10. DUTY OF UTMOST GOOD FAITH Tugasuntukmenyatakansecaralengkapdantepatsemuafaktamatanberkaitandenganrisiko yang dicadangkan yang dalampengetahuanpencadangatausepatutnyadiketahuiolehpencadangsamadaditanyaatautidak

11. AKTA INSURANS 1996 – subseksyen 150 menekankantanggungjawab utmost good faith

12. MATERIAL FACT 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

13. 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

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

15. INDEMNITY

16. INDEMNITY • Definition : Prinsip yang mengkehendaki insurer supayameletakkan insured didlmkeadaankewangan yang samasepertisebelumberlakukerugian • Objective : supaya insured selepasdibayarpampasantidakberada di dalamkeadaanyglebihbaikdaripadasebelumkerugianituterjadi.

17. ..samb. • Effect : Insured tidakbolehmenerimajumlah yang lebihdaripadaamaunkerugianygdialamiwalaupuniamungkinmenerimajumlah yang kurangdaripadajumlahkerugiandisebabkanolehpembatasan pd polisi.

18. 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.

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

20. …samb. • KONTRAK INSURANS AM IALAH KONTRAK INDEMNITI kecuali KONTRAK INSURANS KEMALANGAN DIRI • KONTRAK INSURANS HAYAT BUKAN KONTRAK INDEMNITI • Sebab : sebarangygmelindunginyawa, anggotabadandanfizikalseseorang, prinsipindemnititidakdigunapakai.

21. Settlement channels of indemnity : CASH, REPAIR, REPLACEMENT, REINSTATEMENT

22. INDEMNITY EXCEPTIONS • valued policy • valued policy law • replacement cost insurance • life insurance

23. 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.

24. 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

25. 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.

26. 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

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

28. 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

29. 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 CONTRIBUTION

30. ESSENTIAL OF CONTRIBUTION

31. 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?

32. …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)

33. THE INSURER’S LIABILITY UNDER CONCURRENT CAUSES

34. Points to remember: • INSURED PERIL • EXCLUDED PRIL • UNINSURED PERIL

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

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

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

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

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

40. 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)

41. 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

42. 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)

43. EXAMPLE 2 EXCLUDED PERIL IS INVOLVED

44. EXAMPLE 1 EXCLUDED PERIL IS INVOLVED

45. EXAMPLE 2 EXCLUDED PERIL IS INVOLVED

46. 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

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

48. EXAMPLE 1 PERSONAL ACCIDENT POLICY

49. EXAMPLE 1 PERSONAL ACCIDENT POLICY

50. EXAMPLE 1 PERSONAL ACCIDENT POLICY