Explain briefly the principles of insurance with suitable examples

Explanation

The principles of insurance are as follows :  



(1) Principle of utmost good faith :  

An Insurance contract is a contract of good faith. Both parties to the contract are bound to disclose all material facts which are likely to affect the acceptance of the proposal by the insurance company. It is known as a contract Uberrimae fidie , i.e a contract requiring absolute good faith and the disclosure of all material facts.


For e.g - The insured is a cancer patient does not disclose this material fact in his proposal form. If the insured dies of Cancer, the insurance company is not liable to pay the insurance money.



(2) Principle of insurable interest :  

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