The concept of indemnity in contracts of insurance

Abstract

The events that affect man everyday make life a hazardous affair. No man is immune from misfortune and every man may be the victim of, another's folly. Indeed a prosperous man today may be rendered a pauper tomorrow without warning and through no fault of his own. With this knowledge in mind, men are anxious to provide against any such mishap which may befall them. On the other hand, the game of hazard may go both ways., Indeed a man who takes every precaution in case misfortune strikes him, may do so unnecessarily since such anticipated mishap may also not befall him. Hence arises the business of insurance. Insurance policies are taken out with the purpose of shifting the burden of some risk that weighs heavily on the shoulders of the insured on to the shoulders of the insurer. This can only be; effectively achieved if the insurer undertakes to indemnify the insured for any prejudice which the latter should suffer were the risk insured against to occur. It is precisely this prospect in the mind of the insured which induces him to pay a sum of money, known as the premium, to the insurer in order that the latter should accept to cover the risk. This thesis is entitled "the Concept of Indemnity in Contracts of Insurance".