explain any 2 valid principles of insurance.
Answers
Answer:
UTMOST GOOD FAITH
INSURABLE INTEREST
Explanation:
The Principle of Utmost Good Faith
Both parties involved in an insurance contract—the insured (policy holder) and the insurer (the company)—should act in good faith towards each other.
The insurer and the insured must provide clear and concise information regarding the terms and conditions of the contract
This is a very basic and primary principle of insurance contracts because the nature of the service is for the insurance company to provide a certain level of security and solidarity to the insured person’s life. However, the insurance company must also watch out for anyone looking for a way to scam them into free money. So each party is expected to act in good faith towards each other.
If the insurance company provides you with falsified or misrepresented information, then they are liable in situations where this misrepresentation or falsification has caused you loss. If you have misrepresented information regarding subject matter or your own personal history, then the insurance company’s liability becomes void (revoked).
See how a social media post could ruin a personal injury case.
The Principle of Insurable Interest
Insurable interest just means that the subject matter of the contract must provide some financial gain by existing for the insured (or policyholder) and would lead to a financial loss if damaged, destroyed, stolen, or lost.
The insured must have an insurable interest in the subject matter of the insurance contract.
The owner of the subject is said to have an insurable interest until s/he is no longer the owner.
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