Overview.
Principles of insurance.
The insurance industry has some policies it follows meanwhile offering insurance services to the people and these are called principles of insurance.
So please read this article till the end so as you can learn about the principles of insurance.
It is these principles of insurance that entirely govern then whole insurance sector.
Any one seeking insurance entirely needs to understand the basics of principles of insurance so as to ease your journey in obtaining any insurance policy.
In addition to all those making insurance compensation claim, you need to first understand these principles of insurance listed in this article so as you don’t mess up in your procedure for claiming insurance compensation.
Remember obtaining insurance compensation is not easy, you need to be an amateur in the insurance system has it involves so many steps.
Also to students, mastery of principal of insurance helps you understand the whole topic of insurance taught in your institutions of learning and Excell well in the topic of insurance and generally your exams.
Let’s get on ground to discuss about the principles of insurance, they include among others;
1. Subrogation
This is one of the principles of insurance that states that after full compensation by the insurer to the insured, The insurer acquires the in the remains of the scrap. This mostly applies to property insured against risks like accidents, fire.
For example;
The car of amount 8000$ was fully compensated after the accident, the insurer will take the scrap value.
2. Insurable interests.
This is the second of the principles of insurance which states that a person should only insure the property in which he/she only has financial interests and in any case the property is lost, the person will be financially affected.
3. Proximate cause.
This is the 3rd of the principles of insurance which states that before any compensation is made by the insurer to the insured, the cause of the loss faced by the insured should be close to the actual risk insured against.
For example;
Incase the car is insured against accidents, then later destroyed by fire, then compensation might not be made since there is no connection between the risk insured and the cause of the loss.
4. Utmost good faith.
This is the 4th of the principles of insurance on our list and it requires the insured to disclose all necessary relevant material facts and information concerning all the property to be insured. This will then help the insured to assess and calculate the premiums to be paid by the insurer.
5. Contribution.
This appears as number 5 on our list of the principles of insurance and it states that Incase the property that suffers loss has been insured with many insurers, in the event of the loss, all the insurers will contribute proportionately to the compensation for the loss.
6. Indemnity.
This is the last of the principles of insurance and it states that there is no benefit out of the loss, that is; the insurer should only make compensation to the insured only up to the value of the loss and not anything else more than that.
