Explain any three principle of Insurance with example .

Explanation

1) Principal of Utmost Good Faith Both parties, insurer and insured should enter into contract in good faith Insured should provide all the information that impacts the subject matter Insurer should provide all the details regarding insurance contract

For example - John took a health insurance policy. At the time of taking policy, he was a smoker and he didn't disclose this fact. He got cancer. Insurance company won't pay anything as John didn't reveal the important facts.



2) Principle of Insurable Interest Insured must have the insurable interest on the subject matter In case of life insurance spouse and dependents have insurable interest in the life of a person. Corporations also have insurable interests in the life of it's employees In case of life or marine insurance, insured must be the owner both at the time of entering of entering into the insurance contract and at the time of accident.


3) Principle of Indemnity Insured can't make any profit from the insurance contract. Insurance contract is meant for coverage of losses only Indemnity means a guarantee to put the insured in the position as he was before accident This principle doesn't apply to life insurance contracts