We have seen that insurance involves the payment of premiums by persons known as the insured to an insurer who undertakes to pay a sum of money or its equivalent in kind if the policyholder suffers financially when the event insured against happens.
The agreement between the insured and the insurer is usually expressed in a document known as a policy and the insured is often referred to as the policyholder.
It is sometimes said that insurance is like gambling. In betting, for example, one gives a sum of money to a bookmaker who agrees to pay out on the bet if the horse one has backed wins the race. The law however has found a means of distinguishing between gambling contracts, which it will not enforce, and insurance contracts, which it will. For a contract to be one of insurance the insured person must have an insurable interest in the subject matter of the insurance.
That is, he must stand to lose financially if the event insured against happens.
In life insurance, for example, a man or woman obviously has an interest in his or her own life and can therefore insure it and also the life of a husband or wife.
But one cannot insure the life of anybody else unless their death would result in financial loss to oneself. Similarly, with property, insurance may only be effected if one stands to lose financially by its loss or destruction. Clearly the owner of the property would lose but so also might other people, such as a building society which has lent money on the security of a house or a dry cleaner who has taken in clothes for cleaning.
Information about insurance is available from a variety of sources. In particular the Information Officer, British Insurance Association, Aldermary House, Queen Street, London EC4N 1TU, will answer enquiries about British insurance companies and their work.
The Association publishes ABI members' statistics and Insurance facts and figures each year which may be had for the asking.
A number of films about insurance and fire and accident prevention are available.
The Association also publishes a free booklet About insurance and issues leaflets on topics such as holiday insurance,... see: Information Services General Insurance
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