Insurances – By Ajay Singh (LL.M- Applied Law) – Principal Solicitor – Redline Legal – Parramatta
The primary function of insurance is to provide financial protection against the adverse consequences of events. The concept prohibits the insured to make a profit from his/her loss. If the contract allows the insured to make a profit, it is probably a wager, not an insurance contract.
The main classes of Insurance are:
1) General insurance, and
2) Life insurance.
Some of the common types of General insurances:
Builders’ compulsory insurance – where registered builders are required to take out insurance cover in respect of claims by persons for whom they perform work.
Business interruption or consequential loss insurance – taken out for economic loss resulting from the disruption of his business following damage caused by an insured peril.
Contract works insurance – is effected to cover a building/structure during the course of construction.
Fidelity guarantee insurance – is effected against fraudulent misappropriation or embezzlement by employees.
Fire insurance – A fire insurance policy simply provides protection against damage to or the destruction of property (real or personal) due to fire. There must in fact be ignition of the property insured or of the premises where it is situated. Thus if property is damaged by excessive heat from a fire but is not actually ignited, the damage is not within the terms of a fire policy (subject of course to the specific provisions of the policy).
Householders’ contents insurance – provides cover against designated perils in respect of all items (chattels) contained within a designated place which is the insured’s residence.
Houseowners’ insurance also known as “bricks and mortar insurance”. Generally covers the owner of a residential property against the destruction of or damage to the building by, for example, fire, earthquake, lightning, bursting or overflowing of water tanks, storm, tempest and impact by vehicle.
RW Swagler’s witty summary is worth quoting: “When you buy health insurance, you are saying ‘I bet I get sick’, and the company is saying ‘I bet you won’t’. Just in case you do, however, the company is making the same bet with thousands of other people.”
