Many people often listen to insurance and some who understand the definition and purpose of insurance. Insurance should be understood truly and the community can make an assessment more objectively. And, they can determine the best for themselves.
A insurance or insurance is an agreement between two or more parties, with the insurer binding themselves to the insured by receiving insurance premiums, to provide compensation to the insured due to loss, damage or loss of expected profits, or legal responsibility to third parties who might suffered by the insured, arising from an uncertain event, or to provide a payment based on the death or life of someone insured.
Insurance basic principles:
Indemnity
In this principle, the insurer is willing to pay no more than the actual value that must be borne by the insured. This principle is made for reasons.
First, the purpose of an insurance contract is to return the same economic position when losses have not occurred. Second, the insured does not benefit from losses. Third, reduce moral hazard by eliminating profit incentives.
Insurable Interest
This principle says that the insured must be in a position to suffer financially when the loss occurs. This principle is made to avoid speculation, reduce moral hazard, and not to bear more than the financial needs of the insured (supporting the principle of indemnity ).
Utmost Good Faith
Utmost good faith means that honesty values are highly upheld in insurance contracts.
Subrogation
Subrogation means that the insurer is only obliged to pay according to what is stated in the policy.
Contribution
If an object is insured into several insurance companies, the principle of contribution to each insurance company will apply.
Proximate Cause
Principles of the main causes that are active and efficient cause a loss in an event. If the insured interest has an accident or accident, we will first look for active and efficient causes that move a series of events uninterrupted so that in the end there is a disaster or accident.