PRINCIPLES OF INSURANCE LAW
This concept of insurance is a risk that distributes among a group of people. Hence, the corporation becomes the basic principle of insurance. These are of 7 types:
Explained as follows:
PRINCIPLE OF UTMOST GOOD FAITH
The fundamental principle of insurance that the contract should act in good faith towards each other. They must provide clear and concise information related to the terms and conditions of the contract. The insured and insure both must be transparent in nature. The insured should provide all the information related to the subject matter.
PRINCIPLE OF PROXIMATE CAUSE
Also known as Causa Proxima or the nearest cause. This principle applies when the loss is the result of two or more causes. The insurance company will find out the cause of the loss to the property. If the property insured is damaged, then the company must pay compensation. If causes of damage are not mentioned in the terms, then no damages are insured.
PRINCIPLE OF INDEMNITY
This insurance is only done for the coverage of the loss. Hence insured should not make any profit from the insurance contract. In other words, the insured gets compensation equal to the amount of loss. This is for compensation not for profit-making. This principle helps the insured to set back the financial position like before the loss occurred. This only applicable for property insurance and not for the life insurance contract.
PRINCIPLE OF SUBROGATION
It means when one party stands in for another. As per the principle of subrogation, after the insured that is the individual has been compensated for the incurred loss to him on the subject matter. The rights of the owner's property go to the insurer that is the company. It gives the right to the insurance company to claim the amount of loss from the third party who is responsible for the same.
PRINCIPLE OF CONTRIBUTION
This principle applies when the insured takes more than one insurance policy. It does the same thing as the principle of indemnity. The insured cannot make a profit by claiming the loss of one subject matter from different principles.
PRINCIPLE OF LOSS MINIMISATION
As an owner, it is an obligation on the insurer to take all necessary steps to minimize the loss of insured property. This principle does not allow the owner to be irresponsible or negligent just because the subject matter is insured.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts that have been made to ensure the accuracy and correctness of the information published, White Code Legal and Tax shall not be responsible for any errors caused due to human error or otherwise.
