However these functions run on basing on several principals and as we know “Many men, many minds”, the same can be said about insurances that many kinds of insurances and many principles. Yet we find a few mutual principles among all which count in 7 in number. Which are introduced beneath:-
A) Principle of Utmost Good Faith: To its meaning, this principle says that both of the insurer and the insuring guy/members must sign the contract with mutual understanding and with due belief on each other. Which applies that the insurer must protect the property of the insuring and both will oblige all the rules with no temp to fraud on the other?
b) Principle of Insurable Interest: Well, as we see clearly, this principle focuses on the fact that the insuring person gets the proper amount of the money he deserves from the benefit the insurer makes out of the insured thing, which obviously is the term of insurance itself.
c) Principle of Indemnity: On this principle it is clearly stated that both the parties, which means the insurer and the insuring, are coming on insuring terms for the security and safety of future. It is not a direct business or having or making profit is not the main deal. This is not applicable in the sector of life insurance as no human’s life can be secured for as long as wished and it is not comparable with the whole world’s wealth.
d) Principle of Contribution: This is the outcome fact of the Indemnity principle. Which means the insuring body can ask for a legit amount of loss-protection when they under the terms face a real trouble which they are promised to be secured from.
e) Principle of Subrogation: Likewise this is the result of the precious sector. It applies when the insuring body has been given their sum of which they had the deal of, to have when their insured stuff is damaged. And once they get the damaging money the insurer becomes the owner of the property.
f) Principle of Loss Minimization: According to this, the insured has the responsibility to protect and always try to minimize the loss.
g) Principle of Nearest Cause: This is the simplest principle to understand. When a harm or an accident happens to the insured stuff, the most acceptable means the nearest cause is taken to term and it is justified that if the insuring body will get what they ask for or not.
Different types of insurances are existed in the world. All types of insurances have own principles as own nature. But, all have to maintain some principles which are similar in all insurances policies.
