How to take Insurance Policy cover

Generally acceptable definition Insurance coverage is given as the amount of risk or liability that is covered for an individual or entity by way of insurance services accepted and rendered with sane mind without cohesion.. Now that you know what Insurance policy cover is all about by definition, it is very good for those who care and want to take one to know fully and the in-depth understanding of major aims and objectives and basic principles that guide insurance contract enter into to help give the financial security in terms of protecting the insured from any future uncertainties, otherwise the motive behind the whole exercise, or investment, so to say may not be necessary, though the insured must try as much as possible not to abuse the contract when the cover so as not to breach the contractual agreement.

Another point to know before we proceed is ti avoid the temptation to seek profit opportunities through reporting false occurrences that violates the terms and conditions of an insurance contract you entered. On no account must you allow greed push you to break trust that may \eventually result into breaking the contract entered into which could warrant the invitation of legal penalties on you. Note that the insurer cannot be fooled into accepting any compensation, as such they ultimately, always investigate the remote cause, and any doubtable Insurance claims made. Since the insurer also holds it a duty to accept and approve all genuine claims made, as fast as needed, carefulness on their path is important. Sometime they even have to go for spot assessment before approval..

The Basic Principle of Insurance Cover

a. The Principle of Utmost Good faith (Uberrimae fidei) This principles of utmost good faith takes the front space because it is the basic and first primary principle of insurance cover. Reason being an insurance contract must be signed by both parties involved. In this case is the insurer and the insured demonstrating that they are in an absolute good faith, belief or trust in the contract. Here, and insured must willingly, and without cohesion disclose and surrender to the insurer his or her complete true information regarding the subject matter of insurance contract under review. Insurer’s liability can get legally revoked, cancelled(void) should any facts about the subject matter of insurance are either intentionally omitted, hidden, falsified or presented in a wrong manner by the insured hoping to be indemnified.

The principle of ultimate good faith (Uberrimae fidei) applies to all types of insurance contract, irrespective of whether is Life Assurance(Insurance) or not.

b. The Principle of Insurable interest: This principle simply states that the individual getting insured must have insurable interest in the object of insurance. This means that a person has an insurable interest when the physical existence of the insured object gives him or her some level of comfort or gain, and where its non-existence will give him or her a loss. This translates to mean that the insured person must suffer some financial loss by the damage of the insured object in the contract.

Take an example of an owner of a Commercial bus can be said to have insurable interest in the Bus because he or she is getting frequent income from it. However, if he or she sells it, he or she will cease to have an insurable interest left in that bus.. Conclusively, ownership plays a very vital or crucial role in evaluating insurable interest., In any case, I can say that every person has an insurable interest in his or her own life at any point in time. If you run a business as a merchant, you have an insurable interest in your business of trading. Even a creditor has interest in his or her debtor until the debt is paid off.

c. The Principle of Indemnity: This term indemnity simply mean protection, security and compensation given against damage, loss or injury done to the insured. The principle clearly states that an insurance contract is signed only for getting protection against unprotected financial losses arising due to future uncertainties should they arise. Profit making is not part of insurance contract . The only intention is to give3 compensation in case of any damage or loss to the insured. The insurance contract allows that the amount of compensations paid is in proportion to the insured losses, meaning that the amount of compensations is limited to the amount assured or the actual losses, whichever is less. This means that the compensation must not be less or more than the actual damage. Note that compensation is not paid if the specified loss does not happen due to a particular reason during a specific time period. Therefore, insurance is only for giving protection against losses and not for making profit as some may be tempted to assume.

Notable point is that principle of indemnity does not apply in the case of life insurance, because you the value of human life cannot be measured in terms of money. d. The Principle of Contribution: This principle is corollary of the principle of indemnity, that applies to all contracts of indemnity. If the insured has taken out more than one policy on the same subject matter. This principle states that the insured can claim the compensation only to the extend of actual loss either from any one insurer. That means if one insurer pays full compensation, then that insurer can claim proportionate claim from the other insurers with regards to the insured .

For instance, Miss Matter insures her property worth $250,000 with two insurer “AB Ltd” for $150,000 and “CD Ltd” for $100,000. Miss Matter’s actual property destroyed is $100.000, then She can claim the full loss of $100,000 either from AB Ltd or CD Ltd, or she can claim $65,000 from AB Ltd and $35,000 from CD Ltd. All things being equal, if the insured claims full amount of compensation from one insurer, then she cannot claim the same compensation from other insurer and make profit out of the loss. On the other hand,, if one insurance company pays the full compensation, then it can recover the proportionate contribution from the other insurance company if it so desire.

e. The Principle of Subrogation: This principle simply refers to the substitution of one creditor for another. I can simply say that the principle subrogation is an extension and another corollary the principle of indemnity which also applies to all contracts of indemnity. This principle stipulates that when the insured is compensated for the losses due to damage to his insured property, then the ownership right of such property shifts to the insurer, and only applicable when the damaged property has any value after the event causing the damage, at that point the insurer can benefit out of subrogation rights only to the extent of the amount he or she has paid to the insured as compensated.

Take another instance where Miss Matter insures her house for $2 million and the house is totally destroyed by the negligence of her neighbor, Miss Clarry. In this case, the insurance company shall settle the claim of Miss Matter for $2 million, and may chose or decide to file a law suit against Miss Clarry for $15 million or more , the market value of the house, in the end, if the insurance company wins the case and collects $15 million from Miss Clarry, then the insurance company will retain $2 million(that has already been paid to Miss Matter) plus other expenses such as court fees, then the balance amount, if any will be given to Miss Matter the insurer in this context.

f. The Principle of loss minimization. This principle of loss minimization mandates that an insured must try to minimize the loss of his or her insured property. Assuming in a case of fire out brake or explosion of any kind., the insured must not fold his or her hands and watch without effort to put out or quench the fire through measures like ask for fire extinguishers from your neighbors if you have exhausted your own to control the level from extending to your neighbor., etc.

Now, if for instance Miss Matter’s house is set on fire due to an electric short-circuit , then this case may the fault of Miss Matter, right!. But she should take or make further effort according to the principle of loss minimization to stop the fire by all means humanly possible. By first of all contact or call the nearest fire department office, scout for neighbors help for emergency fire extinguishers, bearing in mind certainly a spot assessment must be conducted.

g. Principle of Causa Proxima(Nearest Cause): It is certainly a Latin phrase and is translated to English word as proximate-Nearest cause, that is when a loss is caused by more one cause, then the closest should be taken into consideration, and is used as that to actually find out whether the insurer is liable or not for the loss. The proximate(ie closest) and not the remote(farest) must be considered first hand.

For instance, if in the case above where Miss Matter’s house burnt down by electric short-circuit, if in the cause of investigation it was latter discovered that Miss Matter used some part of the house(building) for storing cans of fuel, then there are two possible causes for the fire that burnt down the house: (i) there was an electric short-circuit and (ii) there was a section of the building set apart by Miss Matter for storing of fuel that may have heated the fire rise harder. Although the risk generally was insured, but the possible remote cause which is the electric-short-circuit will be considered during investigation even though Miss Matter may have a detailed explanation to give the Insurance company regarding the storing of fuel in the building..

This where life assurance(Insurance) is quiet different. The principle of Causa Proxima does not apply, because any one can die in any way, whichever, naturally or un-naturally, the insurer is liable to pay the amount of insurance stipulated. Death is certain and inevitable, and so different from other insurance cover. Other insurance cover(policy) is taken, and may not happen, but Life Insurance (Assurance) is certain, and can come in any form. That is why it is sometime referred to as Life Assurance. Health Insurance Policy

Health insurance is defined as insurance cover that pays the medical expenses incurred by the health Insurance policy holder..Broadly speaking, the scope could be agreed to cover areas like long term nursing or custodial care needs, disability of any kind, stipulated in the policy.

Sometimes, they are provided through a governments sponsored social insurance companies assigned to do or take up the policy responsibilities-which could be purchased on a group basis, especially by a firm to cover its employees, on the other hand, purchased by individuals or group pays premiums or taxes, which serves or help as protection for them against unexpected or high health expenses that may arise.

There are usually similar benefits you stand to get when you pay for medical expenses, through the provision of welfare package through social welfare programs. The programs are usually funded by government that initiated them.

A routine finance structure, like a month premium, or annual tax is developed to mitigate the over all risk of health care expenses . This is done in other to ensure that the money is available to pay for the health care benefits specified in the insurance agreement, where the benefit is administered by a central and private business that are not set up for profit entity or purposes.

The health care programs could take different dimensions, in form of Travelling Heath Insurance, etc.