Question

Write about the following principles of Insurance and explain them with example.

Principle of Indemnity

Principle of Utmost Good Faith

Principle of Insurable Interest

Answer 1

A. Principles of indemnity advocates that it is a guarantee to restore the insured to the original position before any uncertain event that cause the loss to the insured and the insurer will be compensating the insured and it will be making compensation payment to one party by the other for loss occurred.

principles of indemnity will be exampled through insurance company where insured compensate the insured for damages.

2. Principles of utmost good faith advocates that insurer and the insured must disclose all the material fact before the policy and they will be honest with each other and not hide any information relevant to the contract.

for example when undertaking the insurance contract the insurer and insured will be disclosing the informations

3. Principles of insurable interest is a type of investment that will protect the subject to the financial loss and the person or entity has a insurable interest in the item or event or action when the damage or loss of the object would cause a financial loss or other hardship