Insurance contract like any other contract is subject to certain rules of law before it can be binding or can be said to have any legal backing. In any contract at all, there are always at least two parties involved in the transaction of such contract and because it is of no exception to the rule, the rule is equally applicable to it. However, there are certain rules in insurance contract, which are not applicable to every other contract or are not particularly emphasized. Insurance contract has been defined as contract whereby one person called the insurer undertakes in return for an agreed consideration known as premium paid to him by another person called the insured to indemnify the insured against loss resulting to him in the event of the happening of an insured event.
In view of this fact, various researchers as well as myself has decided to look into the problem and the reason which makes premium payment so important to an insurance contract, this writeup will look into and recommend solution where there are lapses. More often than not, we heard people complain about their risk and often too, we have heard and read in the dailies how insurers agitate for increasse in premium rate payable by the insured especially in the motor insurance contract.
