Basic Principles of Insurance You Should Know. Insurable interest means that in order for the insured to buy an insurance policy, he must have ownership or financial interest in anything he wants insured. This principle is intended to keep people who buy insurance policies from making claims for something they do not own or not directly affect them. For example, you can not buy an insurance policy on the Borobudur Temple unless you have ownership or suffer a loss physically or financially due to the temple structure.
Indemnity, indemnity or indemnity is defined as compensating a person for losses suffered. Indemnity in insurance means that a policy protects you against losses incurred on an insured. The best example is car insurance. If a person has a car accident, he or she will be compensated for the loss caused by the accident.
Uberrimae Fidei, Uberrimae fidei or utmost good faith means that the insurer relies on the insured to disclose relevant information about himself or on anything that is insured. If you want to get health insurance, good faith means that you have to disclose actual health conditions including pre-existing conditions.
Subrogation, is the right of an insurance company to take action against any parties that may have caused a claim against your insurance. For example, if a person is involved in a car accident that is not caused by that person, the insurance company has the right to obtain compensation from the person who caused the accident or the insurance company. This allows the insurer to pay for losses due to claims that are not the responsibility of the insured.
Contingency Insurance, contingency insurance is basically the policy of the worst case scenario. For example, you will export the goods to buyers in other countries. When the goods are damaged or lost when the buyer receives, and the buyer refuses to accept the shipment, you can file a claim through your contingency policy.
Proximate Cause, Proximate cause is basically an insurance that indemnifies that in other types of insurance is not replaced. For example, assume that a truck carrying three tons of koko shirts for the preparation of Eid has an accident. The accident was not severe, and the goods were not damaged, but caused them to arrive a week after Eid so as to disadvantage the retailer. Since the goods are not damaged upon reaching the retailer, then the claim can not be filed on the standard type of policy. An insurance policy that includes a proximate cause allows the retailer to get reimbursed for any losses incurred.