Question

explain about important principal of insurance

Answer 1

Dear student,

The important principles of Insurance are:

1) Principle of utmost good faith: It states that the parties to contract should have faith over each other. As a good practice, insured should disclose all material facts about the subject matter of insurance to insurer.

2) Insurable Interest: Insured must have interest in the subject matter of the insurance. Absence of insurable interest makes a contract null and void.

3) Indemnity: It means security or compensation against loss or damage. This principle states that an insured may not be compensated by the insurance company in an amount exceeding the insured’s economic loss.

4) Principle of Proximate cause: It means nearest cause. This principle is applicable when there are series of causes for loss. It states most dominant cause of loss is considered.

5) Principle of Subrogation: It enables an insured to claim the amount from the third party responsible for cause.


Regards