7 Important Principle of the Insurance

This tutorial is divided into 7 points covering various principles of life insurance. This tutorial is a quick summary of the principle of life insurance. 

Utmost Good faith:- It is the responsibility of the policyholder to give the correct details to the insurance company so that there is no problem at the time of receipt of compensation. In the contract between the policyholder and the insurance company, it is the responsibility of the policyholder to give the correct information to the insurance company. For example, if a person insures his car, but gives the paper of another’s car or the property the policyholder is insuring is not his property, then compensation will not be given in this situation, hence insurance whatever contract has been made between the policyholder of the company, correct information should e given otherwise there may be trouble at the time of compensation.  

Insurable interest:- The property loss of the policyholder is causing real harm to him, it should not happen that the policyholder has insured a worthless asset that he does not need. The insurance company assumes that the policyholder only intends to take advantage. Due to which the property is lost, it should be written in the insurance policy, otherwise, compensation will not be paid.

Indemnity:- The insurance company undertakes the responsibility of paying the policyholder compensation and bringing it back to its original position so that it can take whatever it wants.

Contribution:- If the same property is insured by two companies of a person, both companies will pay half the money. Cannot take money from the same company or both companies. If the policyholder has insured property with two insurance companies, the policyholder will tell the company that I have insured two companies, then that company will meet the other company and decide how to pay.

Proximate Cause:- Due to which the property is lost, it should be written in the insurance policy, otherwise, compensation will not be payable.

Subrogation:- According to this principle, a person insured his vehicle, and then a few days later if an accident happens or the property is lost for some reason, the insurance company will pay compensation and then keep the injured property with him.

Mitigation:- Policyholders should also try their best to protect their assets. If the insurance company feels that the policyholder did not even try to protect, then in this situation there may be trouble in getting compensation.