NATIONAL LAW UNIVERSITY ODISHA

Optional Course

INSURANCE LAWS

July 2024

Course Teacher:

Dr. Rajat Solanki

Associate Professor of Law

COURSE DESCRIPTION
Creation is inevitably followed by destruction. Destruction is an optimum change to worse
and its occurrence involves risk which is inevitable in life. Risk is closely connected with
ownership and owners want to save themselves from risk and out of this desire the business
of insurance took birth. The aim of all insurance is to protect the owner from variety of risks
which he anticipates. He who seeks this protection is called the assured or insured and the
other person who takes the risk by undertaking to protect that other from loss is called insurer
and he does this for a small consideration called the premium. The nature of insurance
depends upon the nature of risk sought to be protected. The fundamental function of
insurance is to shift the loss suffered by a sole individual to a willing and capable
professional risk bearer. Insurance is a method of spreading over a large number of persons a
possible financial loss too serious to be conveniently borne by an individual. It is a social
device whereby uncertain risks of individuals may be combined in a group and thus made
more certain.

Insurance law is the name given to practices of law surrounding insurance, including
insurance policies and claims. Insurance regulation that governs the business of insurance is
typically aimed at assuring the solvency of insurance companies.

The insurance idea is an old-institution of transactional trade. Even from olden days
merchants who made great adventures gave money by way of consideration, to other persons
who made assurance, against loss of their goods, merchandise ships aid things adventured.
The rates of money consideration were mutually agreed upon. Such an arrangement enabled
other merchants more willingly and more freely to embark upon further trading adventures.
The operational framework of insurance idea is provided by the general principles of
contract. The insurance policy, being a contract, is subject to all the judicial interpretative
techniques of rules of interpretation as propounded by the judiciary. Besides, the insurance
idea has a compensatory justice component.

OBJECT OF THE COURSE

The object of this course is to acquire specific knowledge of law and practice relating to
Insurance. This course is designed to acquaint the students with the conceptual and
operational parameters of insurance law.
 LEARNING OBJECTIVES

In order to develop the ability to “think like a lawyer”, it is essential to understand clearly the
theory and doctrine underlying the Indian legal system. The following are some of the
abilities one will need:

1. To inculcate the skill of reading the Insurance Legislations.

2. To identify the fundamental policy choices incorporated in the Insurance Legislations.
3. To analyze on how far the fundamental policy choices are practiced in current
Indian scenario;
4. To understand the present status and to make an estimation on the future of the
Insurance Laws;
5. To recognize and articulate the strengths and weaknesses of an “argument”
independent of one’s level of agreement with it.
6. To articulate opinions on significant, vital, controversial and current issues.

COURSE OUTLINE

Module I: Introduction to Insurance

This module will focus on historical development of insurance law in the world,
nationalization and regulation of Insurance business in India. Further, the role and importance
of IRDA in protecting the interests of holders of insurance policies and in regulating,
promoting and ensuring orderly growth of the insurance industry companies will be
discussed.

1. History, Importance and Working of Insurance

2. Types of Insurance

3. Nationalisation of Insurance Business

4. Role of Insurance Regulatory and Development Authority

Module II: Nature of Insurance

This module intends to provide a basic understanding of the insurance mechanism. It explains

the concept of insurance and how it is used to cover risk. The relationship between insurers

and

their customers. An overview of major Life Insurance and General Insurance products is
 included as well.

1. Contract of Insurance: Features

2. Indemnity, Subrogation and Contribution

3. Utmost Good Faith

4. Premium

5. Insurable Interest

Cases:
1. Castellain v. Preston. (1883) 11 QBD 380
2. LIC v. Dharam Vir Anand (1998) 7 SCC 348
3. LIC v. Raja Vassireddy Kommallavalli, AIR 1984 SC 346
4. V. Srinivas Pillai v. Agent Life Insurance Corporation, Madrass AIR 1977 Mad 381
5. Rohini Nandan Goswami v. Ocean Accident And Guarantee Corporation Ltd., AIR 1960 Cal
696
6. LIC v. Mani Ram, AIR 2005 SC 3349.
7. Mithoolal Nayak v LIC, AIR 1962 SC 814.
8. Satwant Kaur Sandhu v. New India Assurance Company Ltd., (2009) 8 SCC 316.
9. Looker v. Law Union and Rock Insurance Company, [1928] 1 K.B. 554
10. Andagro United Services Ltd. v. United India Insurance Co. Ltd., 2013 (1) CPR 540.
11. Stuart v. Freeman, [1903] 1 K.B. 47
12. Stevenson v. Snow, (1761) 3 Burrow 1237.
13. In Re Argonaut Marine Insurance Company, Limited, [1932] 2 Ch. 34

Module III: General Principles of Insurance

This module intends to provide a basic understanding of the general principles of insurance.

While dealing with each point as mentioned below the difference of aspect with respect to

various types of insurance viz. Life Insurance, Property Insurance, Marine Insurance, Health

Insurance shall be covered under this module

1. Proximate Cause;

2. Nomination and Married Women’s Property Act, 1874

3. Assignment;

4. Settlement of claims and exclusion clauses

5. Intermediaries

Cases:
1. Harshad J. Shah v. LIC of India, AIR 1997 SC 2459.
 2. Pink v. Fleming, (1890) 25 Q.B.D. 396
3. NIAC v. Zuari Industries, (2009) 9 SCC 70.
4. Usha International v. UIIC, AIR 2005 Delhi 424.
5. Wayne Tank and Pump Co. v. Employers Liability Assurance Corporation, [1974] Q.B. 57.
6. Cornish v. The Accident Insurance Company, (1889) 23 Q.B.D. 453.
7. Hamilton, Fraser & Co. v. Pandorf, (1887) 12 App. Cas. 518.
8. Isitt v. The Railway Passengers Assurance Company, (1889) L.R. 22 Q.B.D. 504.
9. Lawrence v. The Accidental Insurance Company, (1881) 7 Q.B.D. 216.
10. Leyland Shipping Company v. Norwich Union Fire Insurance, [1918] A.C. 350.
11. Marsden v. The City and County Assurance Company, (1865‐66) L.R. 1 C.P. 232.
12. Sandeep Kumar Chourasia v. New India Insurance Company, (2013) 4 SCC 270.
13. Sarabati Devi v. Usha Devi, AIR 1984 SC 346.

Module IV: Insurance of Motor Vehicles against Third Party Risks

This module intends to provide a basic understanding of the third party of insurance.

1. Necessity for Third Party Insurance

2. Limits of Liability
3. Duty of Insurers
4. Hit and Run Motor Accidents
5. Motor Accidents Claims Tribunal

Cases:
1. United India Insurance Co. Ltd. Shimla v. Tilak Singh & Ors. AIR 2006 SC 1576
2. Pandurang v New India Life Insurance Co, AIR 1988 Bom 248
3. Skandia Insurance Co Ltd v Kokilaben Chandravadan, AIR 1987 SC 1184
4. Elliott v Grey, [1960] 1 Q.B. 367.
5. Jawahar Singh v. Bala Jain, AIR 2011 SC 2436.
6. Sarla Verma v. Delhi Transport Corporation, AIR 2009 SC 3104.
7. National Insurance Co. Ltd. v. Swaran Singh, AIR 2004 SC 1531.
8. National Insurance Company v. Pranay Sethi, AIR 2017 SC 5157.
9. New India Assurance v. Asha Rani, AIR 2003 SC 607.
10. National Insurance Co. Ltd v. Sobina Iakai, (2007) 7 SCC 786.

Module V: Marine Insurance and Health Insurance

The module intends to discuss contemporary developments taking place in health insurance

and provide understanding of general principles and concepts of law in marine insurance

1. Marine Insurance: General Principles and Legal Concepts

2. Health Insurance: Legal concepts
Legislations:

1) The Insurance Act, 1938

2) The Life Insurance Corporation Act, 1956

3) The General Insurance Business (Nationalisation) Act, 1972

4) The Motor Vehicles Act, 1988

5) The Insurance Regulatory and Development Authority Act, 1999

6) The Marine Insurance Act, 1963

7) The Insurance Laws (Amendment) Act, 2015

8) Married Women's Property Act (MWPA), 1874

9) Motor Vehicles (Amendment) Act, 2019

Books:

K.S.N. Murthy & K.V.S. Sarma; Modern Law of Insurance in India- LexisNexis, 6th edition

M.N. Srinivasan: Principles of Insurance Law- LexisNexis, 10th edition

John Birds, Modern Insurance Law , Sweet and Maxwell, 12th edition

LECTURE PLAN

Module Lectures
1. Introduction to Insurance 7
2. Nature of Insurance Contract 15
3. General Principles of Insurance Law 15
4. Third Party Insurance 15
5. Marine Insurance and Health Insurance 12
Total 64