“An element of risk or chance pervades human life”. Spencer L. Kimball, Cases and Materials on Insurance Law page 3 published by Little, Brown & Company (Canada) limited, 1992.
The Insurance Act, Cap. 117, Laws of the Federation of Nigeria, 2004 applies to all insurance businesses and insurers, other than insurance business carried on or by insurers such as a friendly society or a company or person whose business is established outside Nigeria engaged solely in reinsurance transaction with an insurer authorised under the Act.
A contract of insurance is one whereby one party (the “insurer”) promises in return for a money consideration (the “premium”) to pay to the other party (the “insured”) a sum of money or provide him with some corresponding benefit, upon the occurrence of one or more specified events. See MacGillivray & Parkington on Insurance Law 7th edition, Sweet & Maxwell London, 1981 at page 3; Prudential Insurance Company v. Inland Revenue Commissioners (1904) 2 K.B 658.
The purpose of a contract of insurance is to organize the sharing among a large number of persons of the cost of losses which are likely to happen only to those of them ( or to happen at an earlier time to some than to others). It is therefore characteristic of the contract that the amount of the premium is not intended to be equivalent to the value of the insurer’s actual performance (if any) but is calculated in relation to the likelihood that performance will be required ( or will be required within a certain time).
The contract of insurance, made between parties usually called the “insured” and the “insurer”, is distinguished by the presence of five elements:
i) the insured possesses an interest of some kind susceptible of pecuniary estimation, known as an insurable interest.
ii) the insured is subject to a risk of loss through the destruction or impairment of that interest by the happening of designated perils.
iii) the insurer assumes that risk of loss.
iv) such assumption is part of a general scheme to distribute actual losses among a large group of persons bearing some-what similar risks.
v) as consideration for the insurer’s promise, the insured makes a ratable contribution, called a premium to a general insurance fund.
Certain general rules as to the onus of proof in insurance cases have been laid down in Yadis Nigeria Limited v. Great Nigeria Insurance Company Limited (20010 11 NWLR Part 725 at 531. They are:
a) the assured must prove that the loss or damage was caused by the operation of general risk insured against;
b) if the general risk is qualified by the exception of specific risks, which but for the exception would fall within the general risk, and some part of the general risk is left unqualified the burden is on the insurer to prove facts which bring the case within the exception relied on;
c) if there is a qualification of the general risk which covers its whole scope so that there is no unqualified risk left, the burden is on the insured to prove facts which bring the case within the general risk as qualified;
d) whether a qualification of the general risk is in the nature of an exception or a qualification of the whole risk is in every case a question of construction of the policy as a whole;
e) in construing a policy it must be borne in mind that a general risk with exceptions can generally be turned by an alteration of phraseology into general risk with a qualification covering its whole scope.
Ordinarily, it is for the underwriter or insurer who stands to benefit from the occurrence of a breach of warranty or condition in a policy of insurance to prove the breach of such condition or warranty, where the insurer is contending that the policy is void on the ground that there has been a breach of a condition precedent to the formation of the policy.
This principle is founded on equity, for a breach of warranty or condition provides the insurer with a solid defence to any claim brought in respect of a time subsequent to the breach. It is always open to the parties to insert express words to shift the burden of proof but such words must be very clear. See Northern Assurance Company Limited v. Wuraola (1969) NMLR 1.
In civil cases, the onus of proof always rests on the party who would fail if no evidence at all or no more evidence, as the case may be, were given on either side. It may shift from plaintiff to defendant and vice versa from time to time as the case progresses. See Nigerian Maritime Services Limited v. Afolabi (1978) 2 SC 79.
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