Principles of Insurance
Utmost good faith: A contract of insurance is a contract of uberrimae Fidel i.e. a contract kaind on utmost good faith. Both the insurer and the insured display good faith towards each other in regard to the 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: According to it, the insurer undertakes to put the insured, in the event of loss, in the same position that he occupied immediately before the happening of the event insured against.
Proximate cause: When the loss is the result of two or more causes, the proximate cause means the direct, the most dominant and most effective cause of which the loss is a natural consequence.
Subrogation: It refers to the right of the insurer to stand in the place of the insured, after settlement of a claim, as far as the right of the insured in respect of recovery from an alternative source is involved.
Contribution: As per this principle it is the right of an insurer who has paid claim under insurance, to call upon other liable insurers to contribute for the loss payment.
Mitigation: This principles state that it is the duty of the insured to take reasonable steps to minimize the loss or damage to the insured property.