Basic principle of insurance
1. Indemity
-this principle states that the insurance does not aim at benefity a person, its object is to compesate a person for what he has lost.
2. Insurable i nterest
-this principle states that a person can insure only such property whose destruction would result in financial loss to himself.
3. Proximate cause
-states that there must be a relationship between the cause of loss and the actual risk insured against to enable the insured to claim compasation.
4. Utmost good faith
-states that a person applying for insurance must give the material facts about property to be insured.
5. Subrogation
-states that any gain out of loss compensated belongs to the insurer (insurance company).
6. Contribution
-states that an insured can insure his property to more than one insurer, but when loss is occured he/she may not receive more than sum insured (i.e. value of property insured).
