Insurance is a contract, a threat switch mechanism whereby an organization (Underwriter) promised to compensate or indemnify another party (Policyholder) upon the cost of reasonable premium to the insurance coverage firm to cover the subject-matter of insurance. If you are effectively conversant with these ideas, you’ll be in a greater position in negotiating you insurance needs.
1. Insurable interest. This is the monetary or monetary interest that the owner or possessor of property has within the topic-matter of insurance. The mere fact that it is perhaps detrimental to him ought to a loss happenred because of his monetary stake in that property gives him the ability to insure the property. Castellin Vs Preston 1886.
2. Umberima fadei. It means utmost good religion, this principle acknowledged that the parties to insurance coverage contract must disclose accurately and totally all the facts material to the danger being proposed. That is to say that the insured should make known to the insurer all information relating to the risk to be insured (Looker Vs Legislation Union and Rock 1928). Likewise, the underwriter should highlight and clarify the terms, circumstances and exceptions of the insurance coverage policy. And the policy must be void of ‘small prints’.
3. Website Indemnity. It said that following a loss, the insurer ought to be certain that they placed the insured within the actual financial place he loved prior to the loss (Leppard Vs Extra 1930).
4. Contribution. In a scenario where or more insurers is masking a particular risk, if a loss happenred, the insurers should contribute towards the settlement of the claim in accordance with their rateable proportion.
5. Subrogation. It has usually been said that contribution and subrogation are corollary of indemnity, which implies that these two ideas operates so that indemnity does not fail. Subrogation operates mainly on motor insurance. When an accident happenred involving or more vehicles, there should be tortfeasor(s) who’s accountable for accident. On this basis, the insurer overlaying the policyholder who was not at fault can recover their outlay from the underwriter of the policyholder who is accountable for the incidence.