Financial compensation for a claim for damages resulting from an event or loss that is unforeseeable, that results in an outcome that is adverse to the insured, in return for a premium.
Insurance is a form of contract whereby a sum of money is promised to be paid by the insurer to the insured on the happening of a specified event.
Although there is no statutory definition of insurance, there is a statutory definition of 'contract of insurance' in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, SI 2001/544, art 3(3). Insurance is governed by the general law of contract, the law merchant and the common law. The essential elements of insurance are that: (1) the insurer will pay a sum of money on the happening of a specified event to the insured; (2) there must be uncertainty as to the happening of the event, either as to whether it will happen or not, or, if it is bound to happen, as to the time at which it will happen; and (3) there must be an insurable interest in the insured, which is normally that the event is one which is prima facie adverse to his interest. To constitute an insurable interest the same general conditions must be fulfilled in all classes of insurance. Halsbury's Laws of England, 60 (5th), 2.
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