Principles of Insurance
(i) Principle of indemnity
Insurance aims at restoring the insured to the financial position he/she was in before the loss occurred and not benefit him/her.
(ii) Insurable interest
The insured must prove that the occurrence of the risk will cause him/her financial loss.
(iii) Utmost good faith (uberrima fidei)
The insured must disclose all materials and relevant information that may affect insurance contract it subsequently comes to light.
(iv) Proximate cause.
There must be a fairly close connection between the cause of the loss and the risk insured.
In case of total loss and full compensation the insurer, assumes the rights that insured had on the property destroyed.
In case of property being insured by more than one insurance firm, all the insurers share the burden of compensation in the proportion of coverage of the risk.