LEGAL PRINCIPLE: INSURANCE LAW – Formation of Insurance Contract – Unqualified Acceptance of Proposal Creates a Binding Non-Marine Insurance Contract
PRINCIPLE STATEMENT
A contract of non-marine insurance is created where there is an unqualified acceptance by one party of an offer made by the other. Once a proposal is accepted without qualification, the contract is complete.
RATIO DECIDENDI (SOURCE)
Per Kutigi, JSC, in Ngillari v. National Insurance Corporation of Nigeria (1998) NLC-721992(SC) at pp. 10–11; Paras A–D.
"A contract of insurance, like any other contract, is created where there has been an unqualified acceptance by one party of an offer made by the other… Where a proposal in the normal form is accepted without qualification, the contract is complete and the insurers are bound to issue, and the proposer to accept, a policy in accordance with the stipulations of the proposal."
EXPLANATION / SCOPE
Insurance contracts follow ordinary contract principles. Offer and acceptance create the contract. The policy document is evidence, not the contract itself. The principle applies to non-marine insurance. The insurer cannot later impose new terms. The rule protects proposers who rely on acceptance.