What Are The Principles Of Insurance?

Insurable Interest:

This principle applies to all contract of insurance. We may only insure those things in which we have insurable interest. For example I cannot insure my neighbours house and property since I have no insurable interest in them. I can insure my own property, house etc. A creditor may insure the life of his debtor up to the value of the amount of owed.

Utmost Good Faith:

This principle applies to all insurance contracts. The insured must disclose fully all-material facts known in answering all question in the proposal form and in all dealing with the insurance company.

Indemnity:

This rule applies to all insurance contracts except life assurance and personal accident insurance. Indemnity means to restore the person to the position that he was in immediately before the event concerned took place.

The First Corollary Indemnity Contribution:

This applies to all contracts except insurance of life risks. Contribution applies where a person has insured identical risks on the same property with a number of companies, or when policies overlapped. The amount of the loss is shared proportionately among the insurance companies.

The Second Corollary of Indemnity Subrogation:

This means that when the insurance company has the paid out the claims, it surrogates or steps into the place of the insured and inherits all his rights and remedies agents third parties.