Here we are going to take a serious look at the importance of premium to the validity of an insurance contract and in the course of it, i shall examine the rating of risk as regard to its premium, the effect of the prompt and late payment of premium to an insurance contract.
As mentioned earlier, premium is material fact disclosed in the proposal form and hence a contract of insurance does not begin until first installment premium is paid meaning that there is actually no contract binding until the premium is paid. i will also like to examine briefly the importance of premium to the insurer, the insured and the economy as a whole. There is no way we can examine premium significance to the fullest understanding without substantiating it with evidences. We have seen and read about premium especially when it is used as a reason of not accepting liability on the part of the insurer.
