Insurance Types And Principles
It is a form of risk management primarily used to hedge against the risk of a contingent or uncertain loss.
Insurance types and principles. A contract of insurance must be made based on utmost good faith a contract of uberrimate fidei. 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. A contract of insurance is a contract under which the insurer i e. Understand what is insurance its types and benefits and 7 most important principles of insurance.
As we discussed before insurance is actually a form of contract. An insurance contract. Basically there are two types of insurance as presented below. In case of life insurance spouse and dependents have insurable interest in the life of a person.
Both parties must abide by these principles. Nature of contract is a fundamental principle of insurance contract. Insurance is a means of protection from financial loss. In this the nominee will get the policy amount upon the death of the insurer.
Questions on insurance and its principles are asked in insurance exams such as lic exam nicl niacl etc. An entity which provides insurance is known as an insurer insurance company insurance carrier or underwriter a person or entity who buys insurance is known as an insured or as a policyholder. Insurance company in consideration of a sum of money paid by the. Principle of uberrimae fidei a latin phrase or in simple english words the principle of utmost good faith is a very basic and first primary principle of insurance according to this principle the insurance contract must be signed by both parties i e insurer and insured in an absolute good faith or belief or trust.
The important principle of insurance are as follows. The main motive of insurance is cooperation. Concept of the term insurance. Insurance policies can be declared null and void if an applicant made a misrepresentation of material fact that was relied on by the insurance company.
Hence there are certain principles that are important to ensure the validity of the contract. Insurance is defined as the equitable transfer of risk of loss from one entity to another in exchange for a premium. Get legal help with insurance contracts the principles of insurance in this article ensure fairness in insurance contracts. 1 utmost good faith.
It is also important for the bank exam ssc exam and other government exams. The term insurance may be defined as follows. The insurance that covers the risk of the life of the insured is called life insurance.
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