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Questions
Explain the principles of insurance.
Explain the fundamental principles of insurance.
Briefly explain any five principles of an insurance contract.
Explain the following principles of insurance.
- Utmost good faith (Uberrimae fidae).
- Doctrine of Subrogation.
Explain the following principles of insurance.
- Doctrine of subrogation.
- Mitigation of loss.
Explain any two principles of insurance.
Explain any five principles of insurance.
Solution
- Utmost Good Faith: According to this principle, both the insurer and the insured should enter into a contract in good faith. The insured should provide all the information that impacts the subject matter, and the insurer should provide all the details regarding the insurance contract.
- Insurable Interest: The insured must have an insurable interest in the subject matter of insurance. Insurable interest means some pecuniary interest in the subject matter of the insurance contract.
- Indemnity: Indemnity means security or compensation against loss or damages. In insurance, the insured is compensated with the amount equivalent to the actual loss and not the amount exceeding the loss. This principle ensures that the insured does not profit from the insurance. This principle of indemnity applies to property insurance alone.
- Causa Proxima: The word ‘Causa Proxima' means ‘nearest cause’. According to this principle, when the loss is the result of two or more causes, the proximate cause, i.e., the direct, most dominant, and most effective cause of a loss, should be taken into consideration. The insurance company is not liable for the remote cause.
- Contribution: "Double insurance" is the practice of covering the same subject matter by more than one insurer. In such a situation, all insurers must share and contribute to the insurance claim payment to the insured in proportion to the sum each of them has assured.
- Subrogation: Subrogation means stepping in the shoes of others. According to this principle, once the claim of the insured has been settled, the ownership right of the subject matter of insurance passes on to the insurer.
- Mitigation: In case of a mishap, the insured must take all possible steps to reduce or mitigate the loss or damage to the subject matter of insurance.
Notes
Students should refer to the answer according to their questions.
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RELATED QUESTIONS
______ means a promise to compensate in case of loss.
Assertion: The concept of insurable interest is fundamental to all insurance contracts.
Reasoning: It ensures that the insured has a legitimate financial interest in the subject matter insured.
Identify the principle of insurance based on the given information.
- The insured must be benefitted by the existence of the insured object and must suffer a loss by its destruction.
- It is the financial interest of the insured in the subject matter of insurance.
Explain in brief the Principle of Subrogation.
Name the principle of insurance under which the insurer stands in place of the insured after settlement of claim in relation to the insured property.
Uberimmae fidae, the principle of insurance means ______.
What is insurable interest?
Explain 'contribution' as a principle of insurance.
Briefly explain the principle of Utmost good faith of insurance?
"Insurance is a contract of indemnity." Explain.
"Principle of contribution is a corollary to the principle of indemnity." Comment.
Is insurable interest necessary in all insurance contracts?
