Insurance Definition: Insurance Awareness notes

Insurance Definition: Insurance Awareness is one important section of the Mains exam. The notification doesn’t mention Important Topics/ Syllabus – Insurance & Financial Market Awareness. In this article, we are listing important topics of both the Insurance and Financial Market. Aspirants must cover these topics and prepare these topics thoroughly.

Insurance Definition : Insurance Awareness notes

The term insurance has been defined by different experts on the subject. The views expressed by them through various definitions can be classified in to the following three categories for the convenience of the study.
A. General Definitions
B. Functional Definitions
C. Contractual Definitions

GENERAL DEFINITION

The general definition are given by the social scientists and they consider insurance as a device to protection against risks, or a provision against inevitable contingencies or a co-operative device of spreading risks.

Some of such definitions are given below

1. In the words of John Magee, “Insurance is a plan by which large number of people associate themselves and transfer to the shoulders, of all risks that attach to individuals.”

2. In words of Sir William Bevridges, “The collective bearing of risk is insurance”.

3. In the words of Boone and Kurtz, “Insurance is a substitution for a small know loss (the insurance premium) for a large unknown loss which may or may no occur”.

4. In the words of Thomas, “Insurance is a provision which a prudent man makes against for the loss or inevitable contingencies, loss or misfortune”

FUNCTIONAL DEFINITION

These definitions are based on economic or business oriented since it is a device providing financial compensation against risk or misfortune.

1. In the words of D. S. Hansell “Insurance may be defined as a social device providing financial compensation for the effects of misfortune, the payment being made from the accumulated contributions of all parties participating in the scheme”.

2. In the words of Robert I. Mehr and Emerson Commack “Insurance is purchased to off-set the risk resulting from Hazards which exposes a person to loss”.

3. In the words of Riegel and Miller, “Insurance is a social device where by the uncertain risks of individuals may be combined in a group and thus made more certain, small periodic contributions by the individuals providing a fund, out of which, those who suffer losses may be reimbursed”.

CONTRACTUAL DEFINITION

These Definitions consider as a contract to indemnity the losses on happening of certain contingency in future. It is a contractual relationship to secure against risks. Some of such definitions are

1. In the words of Justice Tindall, “Insurance is a contract in which a sum of money is paid to the assured as consideration of insurer’s incurring the risk of paying a large sum upon a given contingency.

2. In the words of E. W. Patterson, “Insurance is a contract by which one party, for a compensation called the premium, assumes particularly risks of the other party and promises to pay him or his nominee a certain or ascertainable sum of money on a specified contingency.

3. In the words of Justice Channel, “Insurance is a contract where by one person, called the insurer, undertakes in return for the agreed insurer, undertakes in return for the agreed consideration called premium, to pay to another person called insured, a sum of money or its equivalent on specified event”.

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