Full and True Disclosure

Integrity first stated that all material facts should be disclosed in a true and complete form. This means that facts should be disclosed in the form of facts. Regarding material facts, there should be no concealment, misrepresentation, error or fraud. There should be no false statements, no half of the truth, and no silence on substantive facts.

Responsibilities of both parties

The responsibility for disclosing material facts lies with the parties, the insured and the insurer, but in fact, the insured must pay special attention to abide by this principle, because he usually fully understands the facts related to the insurance policy. Despite all effective checks on the insurer, the subject was still not disclosed.

Facts need not be disclosed by the insured

The following facts, however, are not required to be disclosed by the insured:

Facts which tend to lessen the risk.

Facts of public knowledge.

Facts which could be inferred from the information disclosed.

Facts waived by the insurer.

Facts governed by the conditions of the policy.

THE PRINCIPLE OF COMPENSATION.

Generally, except for personal insurance, all insurance contracts are indemnity contracts. According to this principle, the insurer promises to place the insured in the same position as before the insured event occurred in the event of loss. In some forms of insurance, the compensation principle is modified to apply. For example, in marine or fire insurance, sometimes certain profit margins that should have been obtained in the absence of an incident are also included in the loss. For compensation in the true sense, the insured has no right to profit from its losses.

USE FOUND INSURANCE:

The principle of indemnity is a basic feature of insurance contracts. In this case, the insurance industry lacks gambling, and the insured will often cause excess insurance, and then intentionally cause losses, which may generate financial benefits. achieve. Therefore, in order to avoid such deliberate losses, only actual losses are payables, not deposits (higher excess insurance). If the property insurance is insufficient, the insurance amount is less than the actual value of the insured property. If the insurance is insufficient, the insured is usually regarded as his own insurer, and if insured loss occurs, he should bear the loss himself.

To avoid anti-social behavior:

If the insured is allowed to obtain income exceeding the actual loss, it is against the principle of compensation. After insuring his own property risk, he will easily gain income by destroying his property. He will be constantly tempted to destroy property. Therefore, the entire society will only take anti-social behavior; vice versa. That is, these people will be interested in reaping benefits after their property is destroyed. Therefore, the principle of compensation is applied, and only the cash value of his loss is compensated, and nothing more, even though he may have already insured a larger amount.

To keep the premium low:

If the iI1 compensation principle is not adopted, a larger amount will be paid for a smaller loss, which will increase the cost of insurance and must increase the insurance premium. If the premium is increased, two things may happen: first, people may be unwilling to insure; second, unscrupulous people will get insurance to destroy property to profit from this behavior. Both of these things will defeat the purpose of insurance. Therefore, the principle of compensation is helpful to them here, because insurance of this amount is only provided if the actual loss is compensated and does not exceed the actual financial loss, thereby eliminating this temptation.

Subrogation

The theory of subrogation means that the insurer has the right to replace the insured after the claim is settled after the claimant’s right to recover from the alternative source is involved. If the insured is capable of recovering all or part of the loss from a third party due to negligence, the loss may have been deposited, and its right of recovery will be withheld to the insurer when the claim is resolved. Thereafter, the insurance company sought compensation from a third party. The insurer can exercise subrogation before compensating for the loss.

Essentials of Subrogation

Corollary of the principle of indemnity: The principle of subrogation is a supplement to the principle of indemnity. The latter theory says that only the actual value of the property loss is compensated. Therefore, the former follows the principle that if the damaged property has any remaining value or any rights to a third party, the insurer can compensate for the remaining property or rights of the property. . Property, because if the insured is allowed to keep the property, his realized gains will exceed the actual loss, which runs counter to the principle of compensation