The insurance contract is contract like any other, but with particular peculiar principles. The insurance interest should be beyond the control of either party and there must be an element of negligence or that there is uncertainty. Contracts dealing with uncertain future events are either alieatory, contingent or speculative. In insurance risk exists a priori, whether or not we insure. However in a wager there is no insurable interest.
It has been observed that the contract of insurance is basically governed by rules which form part of the general law of contract. But equally, there is no doubt that over the years, it has attracted many principles of its own to such an extent that it is perfectly proper to speak of the law of Insurance.
In the words of Collinvaux in Law of Insurance Pg 2.
“Insurance contracts also exhibit certain features which as a matter of common law apply only to them”
Problem of Definition
As a general rule statutes dealing with the regulation of insurance business do not or have not defined the contract of insurance to obviate the danger of excluding contracts within or that should be within their scope. However a definition is essential as insurance business is closely regulated.
In the words of Ivamy, General Principles of Insurance,
“A contract of insurance in the widest sense of the term may be defined as a contract whereby one person called the insurer undertakes in return for the agreed consideration called the premium, to pay to the other person called the assured, a sum of money or its equivalent on the happening of a specified event”
In the words of John Birds, Modern Insurance Law, Pg 13,
“It is suggested that a contract of insurance is any contract whereby one party assures the risk of an uncertain event which is not within his control happening at a future time. In which event the other party has an interest and under which contract the first party is bound to pay money or provide its equivalent if the uncertain event occurs.”
In the words of Channel J, in Prudential Assurance CO. Ltd Vs Inland Revenue Commissioner 2 KB 658 AT 663,
“A contract of insurance then must be a contract for the payment of a sum of money or for some corresponding benefit such as the rebuilding of a house or the repairing of a shape to become due on the happening of an event, which event must have some amount of uncertainty about it and must be of a character more or less adverse to the interest of the person effecting the insurance”
The Judge further observed that, “ it must be a contract whereby for some consideration usually but necessarily for periodical payments called premiums, you secure yourself some benefit usually but not necessarily the payment of a sum of money upon the happening of some event”
Lord Clerk in Scottish Amicable Heritage Securities Association Ltd Vs Northern Assurance Co  11 ER 287
It is a contract belonging to a very ordinary class by which the insurer undertakes in consideration of the payment of an estimated equivalent beforehand to make up to the assured any loss he may sustain by the assurance of an uncertain contingency.
- Robertson Vs Hamilton 14 East 522
- Fuji Finance Vs Actria Insurance  4 All ER 1075
- D.I.I. Vs St. Christopers Association  1 All ER 395
- Medical Defence Union Vs Department of Trade  2 ALL ER 421
- Gould Vs Curtis  2 KB 84
- Hampton Vs Toxleth  1 Ch. 721
- Re National Standard Life Assurance Corp.  1 Ch. 427.