Insurance, a fundamental pillar of modern finance, is built upon crucial principles underpinning its functionality and purpose. These principles serve as the bedrock upon which the entire insurance industry operates.

The principle of utmost good faith demands complete honesty and transparency between the insured and the insurer. Both parties must disclose all relevant information, ensuring a fair and equitable contract. Indemnity is another cornerstone, stipulating that insurance aims to restore the insured to the same financial position as before the loss, avoiding any financial gain.

The principle of insurable interest necessitates that the policyholder have a vested interest in the insured property or person, preventing speculation. Contribution ensures that insurers share the burden proportionally if multiple policies cover the same risk.

Lastly, the principle of subrogation empowers insurers to assume the insured's rights and recover costs from third parties responsible for the loss.

These principles collectively provide a framework of trust, fairness, and responsibility, allowing insurance to fulfill its vital role in mitigating risk and safeguarding individuals and businesses. Understanding these principles is essential for insurers and policyholders in navigating the complex world of insurance.

Read more: https://docs.google.com/spreadsheets/d/ … sp=sharing