What is Doctrine of Subrogation?

The doctrine of subrogation refers to the right of the insurer to stand in the place of the insured, after settlement of a claim, in so far as the insured’s right of recovery from an alternative source is involved. If the insured is in a position to recover the loss in full or in part from a third party due to whose negligence the loss may have been precipitated, his right of recovery is subrogated to the insurer on settlement of the claim. The insurers, therefore, recover the claim from the third party. The right of subrogation may be exercised by the insurer before payment of loss.

ESSENTIALS OF DOCTRINE OF SUBROGATION

1. Corollary to the principle of indemnity: The doctrine of subrogation is the supplementary principle of indemnity. The latter doctrine says that only the actual value of the loss of the property is compensated, so the former follows that if the damaged property has any value left, or any right against a third party the insurer can subrogate the left property or right of the property because in the insured is allowed to retain, he shall have realized more than the actual loss, which is contrary to principle of indemnity.

2. Subrogation is the Substitution: The insurer, according to this principle, becomes entitled to all the rights of insured subject matter after payment because he has paid the actual loss of the property. He is substituted in place of other persons who act on the right and claim of the property insured.

3. Subrogation only up to the amount of payment: The insurer is subrogated all the rights, claims, remedies and securities of the damaged insured property after indemnification, but he is entitled to get these benefits only to the extent of his payment. The insurer is thus, subrogated to the alternative rights and remedies of the insured, only up to amount of his payment to the insured. In the same way if the insured is compensated for his loss from another party after he has been indemnified by his insurer he is liable to part with the compensation up to the extent that insurer is entitled to. In one USA case is was made clear “If the insurer having paid the claim to the insured, recovers from the defaulting third party in excess of the amount paid under the policy, he has to pay this excess to the insured through he may charge the insured his share of reasonable expenses incurred in collecting.”

4. The Subrogation may be applied before payment: If the assured got certain compensation from third party before being fully indemnified by insurer, the insurer can pay only the balance of the loss.

5. Personal insurance: The doctrine of subrogation does not apply to personal insurance because the doctrine of indemnity is not applicable to such insurance. The insurers have no right of action against the third party in respect of the damages. For example, if an insured dies due to negligence of a third party his dependent has right to recover the amount of the loss from the third party along with insurance policy amount. No amount of the policy would be subrogated by the insurer.

Insurance Info Evolution of Insurance – Know the best

The origin of insurance is lost in antiquity. The earliest traces of insurance in the ancient world are found in the form of marine trade loans or carriers’ contracts which included an element of insurance. Evidence is on record that arrangements embodying the idea of insurance were made in Babylonia, India and Sindhu at quite an early period. In Rigveda, the most sacred book of India and written behind the Indus river, references were made to the concept “Yogakshema” more or less akin to the wellbeing and security of the people. The codes of “Hummurabi” and “Manu” had recognized the advisability of provision for sharing the future losses. However, there is no evidence that insurance in its present form was practiced prior to the twelfth century.

Marine Insurance:

The Marine insurance is the oldest form of insurance. Under Bottomry bond, the system of credit and the law of interest were well developed and were based on a clear appreciation of the hazard involved and the means of safeguarding against it. If the ship was lost, the loan and interest were fortified. The contract of insurance was made a part of contract of carriage, and Manu shows that Indians had even anticipated the doctrine of average and contribution. Freight was fixed according to season and was expected to be reasonable in the case of marine transport which was then very much at the mercy of winds and elements. Travelling by sea and land were very much exposed to the risk of losing their vessels and merchandise because the piracy on the open seas and highway robbery of caravans were very common. Besides there were several risks, many times, it might have been captured by the king’s enemies or robbed by pirates or got sunk in the deep waters. The risk to owners of such ships were enormous and therefore, to safeguard them the marine traders devised a method of spreading over them the financial loss which could not be conveniently borne by the unfortunate individual victims. The cooperative device was quite voluntary in the beginning, but now in modern it has been converted in to modified shape of premium.

The marine insurance policies of the present forms were sold in the beginning of fourteenth century by the Brugians. On the demand of inhabitants of Burges, the Court of Flanders permitted in the year 1310, the establishment in this Town of charter of Assurance, by means of which the merchants could insure their goods, exposed to the risks of the sea. The insurance development was not confirmed to the Lambards and to the Hansa merchants, it spread throughout Spain, Portugal, France, Holland and England. The marine form land lending prominence of Lombards merchants got a prominent section of the London city. They built homes there and took the name of Lombards Street. Later on, this street became famous in insurance history. The Lloyd’s Coffee House gave an impetus to develop the marine insurance.

Fire Insurance:

After marine insurance, fir insurance developed in present form. It had observed in Anglo-Section Guild form for the first time where the victims of fire hazards were given personal assistance by providing necessaries of life. It had been originated in Germany in the beginning of sixteenth century. The fire insurance got momentum in England after the Great Fire in 1666 when the fire losses were tremendous. About 85% of the houses were burnt to ashes and property worth of sterling hundred millions were completely burnt off. Fire Insurance Office was established in 1681 in England. With colonial development of England, the fire insurance spread all over the world in present form ‘Sun Fire Office’ was successful fire insurance institution.

Life insurance:

Life insurance made its first appearance in England in sixteenth century, the first recorded evidence in England being the policy on life of “William Gybbons” on June 18, 1653. Even before this date annuities had become quite common in England, and marine insurance had in fact, made it first appearance three thousand years ago. The life insurance developed at “Exchange Alley”. The first registered life office in England was the Hand-in-Hand Society established in 1696. The famous “Amicable Society” for a Perpetual Assurance Office started its operation since 1706. Life insurance did not prosper in the United States during the 18^th century, because of serious fluctuations in death-rate, but soon after 1800 some active interest began to be shown in this enterprise because of the application of level premium plan which had by then been in operation in UK for more than generation.

Miscellaneous Insurances:

The miscellaneous insurance took the present shape at the later part of nineteenth century with the industrial revolution in England. Accident insurance, fidelity insurance, liability insurance and theft insurance were the important form of insurance at that time. Lloyd’s Association was the main functioning institution. Now insurances such as cattle insurance, crop insurance, profit insurance and after the disintegration of USSR the changes in world’s politics the new form of terrorism insurance or even the natural disasters insurance are taking place. The scope of general insurance is increasing with the advancement of the society.

Bancassurance - Strengthens the economy of India

Insurance and Banking are coexisting financial institution while complementing and supplementing each other. The Insurance Regulatory and Development Authority (IRDA) Act, 1999 have created more opportunities to them for expansion of their markets. They can serve the society in a very effective manner. Banking institutions have got the opportunities to enter in insurance business while insurance institutions have already under the autonomy of starting their banking business. Many non-banking institutions have been opened, acquired funds and dissolved with public money at their stakes. Since they were totally in the hands of private persons, the Government control became ineffective. Banking institutions in India are mainly under the control of Reserve Bank of India. People need insurance but they prefer investment over risk coverage although latter is more important.

Indian mentally for insurance is very bleak people do not feel need of insurance although they have dire necessity for that. Insurance institutions in India have considered forced insurance. The voluntary purchasing of insurance policies is rare phenomena. They prefer to go to bank offices rather than going to insurance for getting risk coverage. The insurance institutions procure the business through their agents who are the main link between the people and the company. Agent’s attitude and environment may work against the free will environment of insurance.

The IRDA, Act is expected to mobiles insurance coverage and resources for investment in the economy. The government has assured that there would not be any disinvestment in the LIC, GIC and their subsidiaries. Insurance Act, 1938, has not been sufficient to regulate the insurance business in India. Foreign companies would not be allowed to hike their equity in the country through their Indian subsidiaries. It has opened a great opportunities for the banking and insurance institutions. They can perform both the functions.

General Insurance Fidelity Guarantee Insurance

Fidelity guarantee insurance was devised in United Kingdom, during Victorian times to replace the age old system of private surety. Formerly anyone who sought to position of trust, such a post in the civil service, a bank, or a commercial firm was required to furnish the names of one or more guarantors or sureties who would the names of one or more guarantors or sureties who would undertake to make good monetary loss, arising from dishonesty on the part of the employee. The old system worked badly because every honest man had to provide sureties and the sureties themselves, whose circumstances might worsen over a period, could easily find themselves financially embarrassed by being called on to perform their bond. Further the employees, when they sought to recover from a surety, may find that he had died or disappeared or had not been the means to meet this liability. Deflations were fairly frequent in times when accounting practice was far from water fight and when amateur auditors were the rule rather than the exception. Indeed, one large insurance company in mid Victorian time lost over 50,000 by the peevilations of a subordinate clerk in its own office. Even with modern accounting practices large losses are not un-known. For example, in 1956, a woman in the USA was charged with converting to her own use of sum of more than a million dollars from her employers.

Since 1840 a number of insurance companies have granted commercial fidelity guarantee insurances. In consideration of a premium the insurers undertake to reimburse to the employers, loss caused by the dishonesty of one or more employees up to stated amounts. Where the guarantee is given in respect of several employees, it is known as collective. The amount of the guarantee may be stated either with a separate limit for each employed name, or else as a single sum for all concerned, it is described as a floating guarantee.

When an individual employee is proposed for guarantee insurance, the insurance company customarily makes full inquiries in to his reputation and past employment record, requiring him to show, how he has been occupied over a number of year. Bitter experience has taught that once a man has defaulted, it is much more hazardous to guarantee his fidelity in the future. For this reasons companies require that all default discovered by an employer should be notified to them, even where the employee makes restitution, or the employer decides to give the man another chance.

In considering whether to grant insurance, the company usually requires full details of the system of check operated by the employer, and can often suggest means of improving this system. No system can be entirely proof against dishonesty, but a good system should ensures that too much responsibility for monetary transactions is not left without counter check, in the hands of one employee and that if default, occurs, they are to be discovered within a short time. Dishonest employees usually start by taking money in a small way, after they have found a loophole in the system of check. Their success encourages them to increase step by step , the size of sums they take, trusted employees may be surprised if an employer is wise to be without such cover, as the largest defaults are perpetrated by employees, because they have shown themselves trustworthy over years, are given important responsibilities. A high amount of guarantee is desirable, because it is the large losses for which insurance is particularly necessary.

Triple Benefit Insurance Policy

This policy is combination of a whole life limited payment and a pure endowment (without return of premium) with a guaranteed annual bonus / valued units payable on death during the endowment term. This policy is granted for a fixed terms of 15, 20 and 25 years. Premiums are payable throughout the term or till prior death of the life assured.

The special feature of this plan is that there is a guaranteed and steadily increasing family provision during the selected period along with the old age benefit. The provision for the family does not terminate when the old age benefit is paid at the end of the period and no further premiums are payable thereafter; but a sum equal to the original sum assured still remains to be paid on the death of the life assured thereafter.

The following benefits are guaranteed provided the policy remains in force for the original sum assured.

If death occurs within the stipulated period:

The benefits payable to the dependents, in this case are:

(I)            The basic sum assured

(II)            A guaranteed bonus / valued units per-annum for each full year’s premium paid excluding the first year’s premium.

This is non-participating plan where under the sum assured increases by fixed amounts during the term. The amount of guaranteed bonus / unit values is fixed and does not defend on the profits of the insurance company.

On survival to the Selected Term:

The following amounts are paid at the survival of the life insured at the selected term:

(I)            The basic sum assured in cash

(II)            Actually paid-up whole life assurance for a like amount payable at death thereafter.

However, the life assured is given the following options in lieu of these two benefits:

An increased cash payment

OR

Fully ‘paid-up whole life insurance policy for increased sum assured.

The alternative benefit of an increased paid-up assurance will be allowed without medical examination subject to the exercise of this option not less than three years before expiry of the selected term. Paid-up values are also given in this case. The benefits available under the policy on maturity will also be reduced in the same proportion. The policy so reduced will thereafter by free from all liability for payments of premiums but shall lose all rights to the guaranteed additions assured in the event of death subsequent to the date of conversion into a reduced paid-up value. Guaranteed surrender value is applicable to this policy.

This plan is useful to a person who, in addition to providing cover for his family, wants to make some provision for his old age. It overcomes the main drawback of the whole life insurance policy, i.e, the assured is permitted to get the policy amount. The other advantage is that the insurance element is greater than an ordinary endowment assurance policy.

Life Insurance Zong Insurance, virtue for the users or Cheap Marketing in Pakistan

Recently a subsidiary of China Mobile in Pakistan called China Mobile Pakistan (CMPak) has introduced a typical form of accidental insurance to the users of their product Zong® cellular service. The insurance is launched in collaboration with Adamjee Life Assurance Company Pakistan. It is said that users can get their accidental insurance in daily charges Rs: 2, 4 and 5 against the sum assured Rs: 100,000, 200,000 and 300,000 respectively. Following terms and conditions have been advertised for the information.

• To purchase the insurance policy the customer should be 18-59 years of age with a valid CNIC.
• To receive the benefits of the insurance policy the customer should be 18-60 years of age.
• One beneficiary who be at least 18 years of age with a valid CNIC.
• The ZONG mobile connection should be in the name & CNIC of the policy purchaser.
• Validity of the Insurance policy is for 1 year.
• Insurance premium (deducted on a daily basis) is non-refundable
• Tax is applicable on telecom services only.
• By subscribing to Zong Insurance service, the customer entitles Zong to share the personal information of the customer and his/her beneficiary with Adamjee Life Assurance Company.

The sound is seemed a revolution in insurance industry in whole world, but will it be the milestone for the rest of world? This question is naturally buzzing in the mind. So before the understanding this strange insurance we must look over all glance of the teledensity in Pakistan.

According to the recent report which shows the teledensity in Pakistan the trend of mobile users is growing in daily basis. In the fiscal year 2010-11 the report shows that the teledensity in Pakistan is reached 69% in the current year and cellular users are now 108.9 million from the total population 180 million. And cellular operator wise the following data has been produced:

1. Mobilink             (3,33,78,000 users)
2. Telenor              (2,66,67,000 users)
3. Ufone                (2,05,33,000 users)
4. Warid                (1,73,87,000 users)
5. Zong                 (1,09,27,000 users)

This report is issued by the competent authority. But ground reality differ the situation. It doesn’t mean that every second person of Pakistan is using mobile, but it is well noticeable that more than 80% users have multiple connections and time to time they switch over the services from one network to another one. Moreover, day by day the cheap marketing methodologies of the advertisements by the above companies have also created a rough competition scenario in Pakistan mobile networks.

Another bitter truth is more than 60% of mobile users have don’t sufficient knowing about the proper usage of the mobile even. They make a call, receive a call and text messaging. Recently a survey was conducted by a newspaper in which it had shocked to the readers when the result shown. In the result it was explore that 95% text messages in the mobiles are forwarded. Just only 5% messages were shown that these messages were typed by the users.

In this culture Zong is introducing the accidental insurance to their users. Now look the subscription of the Zong users, it is lower subscription in the Pakistan, where users don’t care about the insurance but the cheap call rates and fascination SMS packages.

If this sort of insurance is seemed good then it is better to initiate by the Pakistan Telecommunication Authority (PTA) rather than a mobile operator. Then may be the aim will be furnished.

Motorcycle insurance-How to get it along with discount

 

Motorcycle or bike riding is considered a symbol of style among youngsters. You put a lot of your time to buy the best motorcycle which suits your style as well as meet the needs of your life without putting a lot of burden on your pocket. Surely you don’t want to risk the security of your motorcycle in case of any mis-happening that might occur. Don’t under estimate the need of insurance for your bike as it not only protects your bike but it also protects you if any accident happens.

Buying insurance is similar to buying motorcycle as you look for the same that it meet the needs of your life and at the same time does not put burden on your pocket. Once you decide to buy motorcycle insurance then you should know that there are some factors that determine motorcycle insurance rates. Motorcycle type and age plays an important role in determining insurance costs. A small scooter will cost less as compare to sports motorcycle as it costs more to repair after accident. A brand new motorcycle cost more to repair in comparison to the old one. Driver’s age also do matter in this regards as younger driver has less experience driving on road as compare to older person. If a driver has history full of accidents and tickets than it’s more likely to raise his insurance premium.

There are also some other factors like locality and safe parking of the vehicle. If you live where there is high traffic and has significant risk of accidents than it will affect insurance premium. Safety of the vehicle is also important such as where you park your motorcycle inside or outside of garage. Mileage of motorcycle also plays an important role.

Before buying motorcycle insurance compare quotes from different insurance provider companies and choose one which protects your motorcycle to the maximum as well as don’t over burden your pocket. Look for the following thing.

Insurance coverage in case of theft

Insurance coverage if your motorcycle is damage in fire

Insurance coverage in cause of accident

Third party damage coverage’s if they or their property is damage because of you whether third party is insured or not.

Make sure that your insurance policy not only cover the damage of your motorcycle but also covers you as motorcycles don’t crash alone in case of accidents. So it should also protect you as well as your motorcycle and cover medical expenses.

Look for any possible discount on your insurance policy if it is available get it. Paying a higher deductible amount which you agree to pay before your insurance takes effect also reduces your insurance premium. Having multiple insurance from same company also reduce your insurance rates such as if you also own a car then insuring both your motorcycle and car will defiantly save some bucks for you. Doing a little research will won’t hurt you so compare quotes from top insurance companies which are easily accessible through internet today. Keep each and every detail in mind and then choose. One most important thing that cheapest doesn’t mean that it will protects you completely. Find one which do both not only provide complete protection but also don’t put a huge burden on your pocket.