Overview.
Importance of insurance principles
1. Indemnity.
This principle aims at restoring the insured to the financial position that he was before the loss and hence no benefit out of the loss.
2. Subrogation
The importance of this principle is to restore the insured to the original financial position.This makes the insured regain financial stability and continue with their business incase what was insured was a business.
3. Proximate cause.
This principle helps the insurer to establish the exact cause of the loss being suffered by the insured and hence faster compensation can be made.
4. Utmost good faith.
The policy importance is that it assists the insurance company to assess the suitability for insurance to the insured ad helps in easier calculation of premiums.
5. Insurable interests.
The importance of this principle is that it limits people to insure only their properties. If they are allowed to insure other people’s property, then they would attempt to destroy so that they can gain from the destruction.
