Basic Principles of Insurance

In the insurance world there are six basic principles that must be met, namely insurable interest, Utmost good faith, proximate cause, indemnity, subrogation and contribution.

1. Insurable interest
The right to insure, arising from a financial relationship, between the insured with the insured and legally recognized.

2. Utmost good faith
An action to disclose accurately and completely, all facts material (material fact) about something that will be insured both solicited and unsolicited. The meaning is: the insurer must honestly explain clearly everything about the scope of terms and conditions of insurance and the insured must also provide clear and accurate description of the objects or interests of the insured.

3. Proximate cause
is a cause of active, efficient cause a train of events that lead to a result without the intervention of which started and working actively from a new and independent sources.

4. Indemnity
A mechanism by which the insurer provides financial compensation to put the insured in a financial position that he had immediately before the loss.

5. Subrogation
The transfer of demand from the insured to the insurer after a claim is paid.

6. Contribution
While the insurer the right to invite any other person equally bear, but not necessarily the same obligations to the insured to participate provide indemnity.