Welcome to Study Room, where you can ask questions and receive answers from other members of the community.
1 like 0 dislike
195 views
in Grade 12 by Visitor (160 points)
by
0 0
Hello
Sorry for a late reply on this question

1 Answer

1 like 0 dislike
by
selected by
 
Best answer

Principles of Insurance

Indemnification/Indemnity:

  • Usually applies to short term insurance, as the insured is compensated for specified/proven harm/loss.
  • Insurer agrees to compensate the insured for damages/losses specified in the insurance contract, in return for premiums paid by the insured to the insurer.
  • Protects the insured against the specified event that may occur.
  • Pay-outs from insurance companies/insurer will only be made; if there is proof that the specified event took place/if the insured can prove the amount of the loss/ damage.
  • The amount of indemnification/compensation is limited to the amount of provable loss/damage, even if the amount in the policy/insurance contract is higher.
  • The insured must be placed in the same position as before the occurrence of the loss/damage/The insured may not profit from insurance.

Security/Certainty:

  • Applies to long-term insurance where the insurer undertakes to pay out an agreed upon amount in the event of loss of life.
  • A predetermined amount will be paid out when the insured reaches a pre-determined age/or gets injured due to a predetermined event.
  • Aims to provide financial security to the insured at retirement/the dependents of the deceased.

Utmost good faith:

  • Insured has to be honest in supplying details when entering in an insurance contract.
  • Both parties/insurer and insured must disclose all relevant facts.
  • Insured must disclose everything that may affect the extent of the risk.
  • Details/Information supplied when claiming should be accurate/true.
Insurable interest:
  • Insured must prove that he/she will suffer a financial loss if the insured object is damaged/lost/ceases to exist.
  • An insurable interest must be expressed in financial terms.
  • Insured must have a legal relationship with the insured object in the contract.

Related questions

0 like 0 dislike
1 answer 571 views
0 like 0 dislike
1 answer 1.8k views
0 like 0 dislike
0 answers 5 views
0 like 0 dislike
0 answers 7 views
No registration is required in order to post/ask, comment and or answer any question on this forum. Please note this website was created to help learners discuss their school work with other learners and teacher from anywhere around South Africa for free. Why Free? We generate our revenue through adverts to keep the forum running 24/7

1.4k questions

558 answers

71 comments

158 users

Welcome to Study Room, where you can ask questions and receive answers from other members of the community. Members/Users are also allowed to answer any questions or add comments. If you think a certain answer is wrong or slightly incorrect' please use the comment button below the answer to add your suggestion.

Let's see how smart you are Click/Touch Here To help other students on their questions

...