Basic Principles of Insurance

In the world of insurance there are 6 types of basic principles that must be met, the insurable interest, utmost good faith, proximate cause, Indemnity, subrogation and contribution.

• Insurable interest

The right to insure, arising from a financial relationship, between the Insured and the insured is legally recognized.

• Utmost good faith

An action to reveal the accurate and complete, that all facts material (material fact) about something that will either be insured or not. Means is: the insurer must be honest with clearly explain everything about the extent of the requirements / conditions of insurance and the Insured must also provide information that clearly and correctly on the object or be the interest.

• Proximate cause

A cause of active, efficient cause chain the events that lead to a result without the intervention of a start and an active source of new and independent.

• Indemnity

A mechanism where the insurer provides financial compensation in the efforts put in the Insured’s financial position which he had shortly before the occurrence of loss.

• Subrogation

The rights of the Insured to the charge after the insurer paid claims.

• Contribution

Underwriter for the right to invite other insurer that same bear, but not necessarily the same obligations to the Insured to provide Indemnity participate. (Wikipedia Indonesia)