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Principles Of Insurance – The Insurer’s Protection

Insurance companies take risks whenever they write a policy to clients, especially ones that are intent on committing fraud.  Like it or not, insurance companies are businesses and their business is to provide insurance to those who are looking to get insurance.  However, it is crucial that there is equity on both sides to make the deal fair.  This makes it proper that the client divulge everything that is needed for the insurer to deem if the insurance policy they are giving is fair on their side.  As safeguard from getting swindled by fraudulent schemes, insurance companies have built the six Principles of Insurance to protect their side of the business.

  1. Utmost Good Faith –it is understood that the client should disclose all important and relevant matters of the items being insured. Failure to reveal important details may be deemed as intent to commit fraud.  Take for instance life insurance.  Insurers will usually not insure someone with hypertension or require a higher sum to insure them.  Failure to disclose this detail means that when it comes to making claims over the demise of the insured person means that the insurer will not release the agreed upon claims due to failure to disclose the medical condition.
  2. Insurable Interest – the insurer will not insure or provide claims on something you find no value for. It is understood that when you insure something, it means that something is of relevant importance to you.  Insuring something that is of no relevant interest to you may be regarded as an intention to commit fraud.
  3. Indemnity –your insurer will only compensate for the amount of expenses needed to remedy the damage or amount needed to replace it. Once claims have been provided, the insurer will indemnify that the insured item is now in its pre-damaged condition.
  4. Proximate Cause – there are different coverage available on each insurance type. In the event that what has been insured gets damaged or lost but is not properly covered for the reason it has gotten lost or damaged, the insurer is not liable to pay claims as the said loss or damage is not within the coverage of the policy.
  5. Subrogation – if a third party were to cause damage, the insurer will pay claims but will sue the third party to cover their losses. Normally, the insurer will require double the amount of paid claims as compensation.
  6. Contribution – as a protection, you cannot be insured with two insurers for the same policy. Should the event come wherein you need to make claims, only one insurer will pay your claims and the amount will be shared by both insurers.

How Important Is Auto Insurance

Everybody knows that having a car can be great, especially ones that you can be proud of and can get you to where you want to go without failing.  We also know that regrets always come in the end, just like when you fail to maintain your car and something goes wrong because of it.  For example, you are going on a trip but fail to check if there is water and coolant in your radiator which then results in the overheating of your engine during your trip.  Filling up the radiator with water will only take less than five minutes whereas the trouble it caused you and the expenses it created can really take a toll on you.

The thing is that there are many important things about a car that we know but sometimes fail to take measures for.  Another good example is auto insurance.  Auto insuranceis very important because it provides you and your car the necessary protection needed to prevent you from having to spend a large amount of money in the event of eventualities you are covered for.  However, if you do not have auto insurance, you will have to should all the expenses needed to compensate damages or physical injuries you may have caused.

Car insurance is a very important investment as this will serve as a risk reduction in case you do get involved in any eventualities.  To not buy auto insurance is a risk for you as a car owner.  The problem is that no matter how careful you are when driving, there are simply certain inevitabilities waiting to happen on the road.  You will never know when it is you that will get involved in an accident.  Accidents happen very quickly and you can never prepare for them no matter how careful you are.

These days, insurance has become a mandatory when renewing your car’s yearly registration.  Although there is no mandate on the amount of coverage your car should carry, it is required that you have at least auto insurance to be able to renew your car registration.  If this is the case, since you are already getting auto insurance, why not customize your auto insurance coverage to what you possibly may encounter with your regular driving so that you get the most protection possible with your auto insurance.…

Principles Of Insurance – What Is This About?

We often regard insurance as a means of protection and as a means of risk reduction for the things we value.  However, insurance companies do not have this luxury as they cannot exactly insure themselves from any fraudulent transactions.  For this reason, as a means of protecting themselves and their best interest, insurance companies follow the six principles of insurance.  These six principles of insurance acts a safeguard for them against people who want to make a quick buck out of their insurance policies.

Utmost Good Faith – when a client insures something, it is understood that they will fully disclose everything that is needed about the item they are insuring.  Any intentional act of not disclosing any important or relevant matter is a sign to commit fraud.  For example, a client is getting life insurance but fails to mention that they have diabetes.  This failure in mentioning a medical condition that they have can be regarded as an act to commit fraud.

Insurable Interest –the insurance company reserves the right to refuse items being insured, especially if they are not important to the client.  If you insure something that is not of value to you, it can be deemed that you intend to commit fraud since you would not mind losing the item you insured.  Why insure something that is not valuable to you in the first place unless you want to make claims from its loss.

Indemnity – the insurer will only pay the amount of repairs or replacement for loss.  When claims have been released, the insurer indemnifies that everything is now at its prior pre-damaged state.

Proximate Cause – there are different coverage available for insurance type.  Claims can only be made if the coverage you have is the exact same reason for the loss or damage.  For example, you have home insurance for hurricanes.  If the cause of damage is flooding that is caused by a hurricane, it means you will not be able to make any claims from the damage incurred.

Subrogation – if a third party damage has been made, the insurer will pay you for claims but will sue the third party so as to compensate their losses from the claims they have given their policyholder.

Contribution – a client can buy two or more insurance policies from different insurers.  However, when it comes to making claims, only one will pay the claim and the amount will be shared by the insurers.…