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Generally, insurance contracts may be of two types as follows:- a) Contract of Indemnity, and b) Life Insurance Contract a)Contract of Indemnity All the contracts of insurance, except life insurance are contracts of indemnity. Indemnity means to make good the actual loss and nothing more than the actual loss. The basic objective of insurance is to transfer the loss of an individual to the insurer. He, in turn, very easily spreads it over a large number of persons (insureds). The compensation to the insured shall never be more than the acutal loss suffered by him. He is never allowed to make a profit out of loss. In short, the maximum amount of compensation is limited to the amount of acual loss or the value of the policy, whichever is less b) Life Insurance Contract Life insurance is a contract in which the insurer, in consideration of a premium, undertakes to pay a certain sum of money either on the death of the insured to his nominees or on the expiry of the fixed p...

The entire business process has to face numerous risks and uncertainties. Risks arise due to uncertainties in regard to cost, loss or damage. In business, risks include changing demand and fashions, price falls, change in the market conditions, new inventions, fire, flood, accidents etc.  In the words of Boon and Kurtz, "Risk is the chance of loss or injury." It may or may not happen. In business, the risk may be defined as the danger or loss from unforseen circumstances. It implies a possibility of loss due to unpredictable happening in the future Types of Risks The risks may be classified as 1. Pure and Speculative Risks Pure risk refers to those situations that involve the chances of loss or no loss. For example, a car can meet with an accident or it may not meet with an accident. Speculative riskrefers to those situations where there is possibility of loss break-even or even a profit Pure risks are generally insurable, while the speculative risks are no 2. Dyn...

The history of insurance can be traced back to the early civilization. Insurance as civilization progressed, the incidence of losses started increasing. It gave rise to the concept of loss sharing. The Chineese traders, travelling treacherous waters distributed their goods among several vessels, so that the loss from any one vessel being lost, would be partial and shared. The Romans had a Jettison' Law by which the captains of ships caught in storm threw away some of the cargo to reduce the weight and restore balance. The loss was shared by the owners in proportion. The Babylonian traders agreed to pay additional amounts to lenders, as the price for writing off the loans, in case of the shipment being stolen. The Great Fire of London gave a boost to insurance and the fist fire insurance company was started in 1680, with the name Fire Office The origin of insurance business in its modern form, is traced to the Lloyd's Coffee House in London. Traders, who used to gather in th...