Legal Definition of Risk in Insurance Policy

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The risk of the insured against is quite obviously not confined to an accidental fire. If the ship had been set alight by some mischievous person, but without the plaintiff’s connivance, there can be no doubt but that the plaintiff would be entitled to recover. Of course, the plaintiff cannot recover if he was the person who fired the ship or was a party to the ship being fired. This result, however, does not depend upon the construction of the word “fire” in the policy, but on the well-known principle of insurance law that no man can recover for a loss which he himself has deliberately and fraudulently caused. It is no more than an extension of the general principle that no man can take advantage of his own wrong.

Legal Definition of Risk in Insurance Policy

By

S J Tubrazy

By issuance of insurance policy against agreed premium, the insurer assumes the responsibility to indemnify the insured against possible loss, damage or injury that may be sustained or occasion on account of any contingency, hazard, danger or on happening of any act/event, commonly known as “Risk” covered that may occur or take place at a future date, but during the currency of the policy. Once the insured proves that the loss, damages or injury on account of “Risk” covered has been sustained. Then the heavy burden lays upon the insurer to dislodge and repudiate such claim by establishing any of the factors namely;

(i) Risk was not covered.              

(ii) Risk was excluded by exception clause.

(iii) Policy was obtained by (a) suppression of materia: fact, (b) misrepresentation, (c) fraud by the insured.

(iv) Breach of material term/condition on which policy was issued.

A word used in a contract or specifically speaking in case of a insurance contract a particular “risk” covered are understood to mean and include with all its incidents, concomitant, and shades of meaning which may be attributable to such word or “risk” in common parlance, unless a particular or restricted meaning is agreed to be assigned by the parties to a contract. After a contract is executed then a party cannot be unilaterally allowed to apply or assign any restricted or particular shade of meaning to a “word” or the “risk” covered to avoid or repudiate the contract and avoid its obligation  liability arising there under.

 The risk of the insured against is quite obviously not confined to an accidental fire. If the ship had been set alight by some mischievous person, but without the plaintiff’s connivance, there can be no doubt but that the plaintiff would be entitled to recover. Of course, the plaintiff cannot recover if he was the person who fired the ship or was a party to the ship being fired. This result, however, does not depend upon the construction of the word “fire” in the policy, but on the well-known principle of insurance law that no man can recover for a loss which he himself has deliberately and fraudulently caused. It is no more than an extension of the general principle that no man can take advantage of his own wrong.

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