Priciples Of Insurance

Question 1

Insurable interest

Answer 1

To insure something, you must benefit from its existence and suffer (financially) from its loss. E.g insure you house not ur neighbours

Question 2

Utmost good faith

Answer 2

You must answer all questions truthfully and reveal all relevant information when completing a proposal form e.g when you are applying for motor insurance, you should report any penalty points.

Question 3

Indemnity

Answer 3

The insured person should not profit from insurance.e.g if a car valued at €10,000 is stolen, the maximum amount of compensation that will be paid is €10,000.

Question 4

Subrogation

Answer 4

Once an insurance company has paid compensation for any insured item, the right of ownership of that item passes to the insurance company.

Question 5

Contribution

Answer 5

Where the same risk is insured with more than one insurer, they will divide the cost of the claim between them.e.g one company pays half