Principles of Insurance

All insurance is based on the following five basic rules or principles:

• Insurable Interest
• Utmost Good Faith
• Indemnity
• Subrogation
• Contribution

Insurable Interest

To insure something you must benefit from its existance and should suffer financialy from its loss.

Utmost Good Faith

You must answer all questions truthfully and reveal all relevant information when completing the proposal form or claim form.

Indemnity

The insured person should not profit from insurance. Insurance exists to put the insured person back in the same financial position they were in before the loss, not a better one.

Subrogation

Once an insurance company... (More)

What is Insurance?

- Insurance offers protection against possible loss and tries to put the insured person back in the same financial position they were in before the loss occurred.

An insurance policy sets out details of the types of losses covered and the amount of compensation to be paid.

- Compensation is a financial payment made to the insured person if they suffer an insured loss.

- Premium is the amount paid by the insured person to an insurer in return for providing insurance cover for a particular risk. It is a fraction of what the item is worth.... (More)

A consumer is a person who buys goods and services for their own use e.g. me when I buy new clothes to wear them.

A consumer need is anything that I cannot do without and that I need in order to survive e.g. food, warmth, shelter, clean water, basic clothing.

A consumer wants is something that I would like to have but I don’t need to survive (it is non-essential) e.g. the latest fashion in clothes, the most up to date mobile phone, jewellery, make up….

A budget is a plan of how much money I am going to receive... (More)