Question

State and explain five principles of insurance

Answer 1

1. Utmost good faith
   • The person taking out insurance cover to disclose all relevant information/ facts relating to the property or person insured.
2. Proximate cause
   • For the insured to be compensated there must be a very close relationship between the loss suffered and risk insured against
3. Contribution
   • If the insured has taken policies with more than one insurance company covering the same risk, in the event of loss the insurers contribute proportionately to indemnify the insured.
4. Indemnity
   • The insured would be compensated in such a way that he/she is put back to the financial position he/she was just before the risk insured took place
5. Subrogation
   • Whatever remains after the insured has been compensated becomes the property of the insurer.

Answer 2

Insurance interest, Indemnity, Utmost of good faith, Subrogation, Proximate cause