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Clarke, Malcolm --- "An Introduction to Insurance Contract Law" [2012] ELECD 155; in Burling, Julian; Lazarus, Kevin (eds), "Research Handbook on International Insurance Law and Regulation" (Edward Elgar Publishing, 2012)

Book Title: Research Handbook on International Insurance Law and Regulation

Editor(s): Burling, Julian; Lazarus, Kevin

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781849807883

Section: Chapter 1

Section Title: An Introduction to Insurance Contract Law

Author(s): Clarke, Malcolm

Number of pages: 16

Extract:

1 An introduction to insurance contract law
Malcolm Clarke1



Risk is an unavoidable fact of life. Certainly some actions are riskier than others. Sitting
and reading a book about mountain climbing is likely to be less risky than undertaking it.
Yet in all walks of life there are risks; the risk that property will be stolen or that an
accident will befall one. We may become liable to others if our activities cause them harm.
Even things that are certain to happen, such as death, may be uncertain as to their timing.
To insurance policyholders, as conceived by the insurance economist, the `concept of
risk comprises two components ­ a detriment aspect and an uncertainty aspect'.2 As
regards the detriment, by taking insurance, the element in the detriment, although no
longer a risk but a certainty, is reduced to the level of the premium; and the inconvenience
element is curtailed to the time it takes to find insurance, and, if the risk strikes, to obtain
indemnity. As for the uncertainty and whether the risk will strike, that is not reduced
objectively. Uncertainty is reduced objectively, however, as to the extent of the detriment,
notably the cost.
Insurance provides a mechanism for the management of risk. It is not the only way to
manage risk. One can take other actions in response to risk, including seeking to mitigate
the chance of the contingency occurring or being prepared to deal with the consequences
of the contingency (such as installing a sprinkler system ...