PRINCIPLES OF UTMOST GOOD FAITH : The principle of utmost good faith suggests that both parties that is insurer and insured must disclose each fact and information related to insurance contract to each other.
PRINCIPLE OF INSURABLE INTEREST: For a valid insurance contract it is necessary that insured has full interest in property or life so insured by him. This means that if there is any damage to life or property so insured, the insured will have to incur loss due to this damage and insured will be benefited if full security is been provided.
PRINCIPLE OF INDEMNITY: Except for the contract of life insurance estimation regarding loss can be made on all other contracts. Hence , principle of indemnity applies to all contracts except the contract of life insurance.
PRINCIPLE OF INSURABLE INTEREST: For a valid insurance contract it is necessary that insured has full interest in property or life so insured by him. This means that if there is any damage to life or property so insured, the insured will have to incur loss due to this damage and insured will be benefited if full security is been provided.
PRINCIPLE OF INDEMNITY: Except for the contract of life insurance estimation regarding loss can be made on all other contracts. Hence , principle of indemnity applies to all contracts except the contract of life insurance.
PRINCIPLE OF WARRANTY:The term 'warranty' here mean for certain terms and conditions which are to be fulfilled by insured.If insured does not follow this terms and conditions , the insurance contract can be cancelled.
PRINCIPLES OF CONTRIBUTION:Principle of contribution suggests that if any person gets his property insured by three insurance companies then at the time of incurrence of loss all the three companies will compensate for the loss incurred but in a proportionate manner.
PRINCIPLE OF SUBROGATION:Principle of subrogation applies to all compensatory insurance contracts.As per this principle of subrogation when any insurance company compensates the insured for loss of any of his property then all rights related to that property automatically get transferred to insurance company.
PRINCIPLE OF MIGRATION OF LOSS:Principle of migration of loss suggests that insured should try to minimize the loss of his property even if it is insured.
PRINCIPLE OF PROXIMATE CAUSE: The insurance company will compensate for the loss incurred by the insured due to reasons mentioned in insurance policy but if losses are incurred due to the reasons not mentioned in insurance policy, then principle of proximate cause is followed.
PRINCIPLE OF MIGRATION OF LOSS:Principle of migration of loss suggests that insured should try to minimize the loss of his property even if it is insured.
PRINCIPLE OF PROXIMATE CAUSE: The insurance company will compensate for the loss incurred by the insured due to reasons mentioned in insurance policy but if losses are incurred due to the reasons not mentioned in insurance policy, then principle of proximate cause is followed.
1 comments:
Thank you so much for explaining the principles of insurance. I do have read all these points when I was in college many years back. You have explained each one of them in a very simple way that is easy to understand.
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