Q.List out the principles of Insurance and explain any one of them.

Insurance is based on principles such as utmost good faith, insurable interest, indemnity, contribution, subrogation, causa proxima and mitigation of loss; utmost good faith requires full and honest disclosure of all material facts.

The principles of insurance are:

1. Utmost good faith (uberrimae fidei)
2. Insurable interest
3. Indemnity
4. Contribution
5. Subrogation
6. Causa proxima (proximate cause)
7. Mitigation (minimisation) of loss

Explanation of one — Utmost good faith: An insurance contract is a contract of uberrimae fidei, that is, of utmost good faith. Both parties must act with complete honesty. The insured must truthfully disclose all material facts about the subject matter — for example, in life insurance his true age, health and habits, and in fire insurance the nature of the goods and the building. Likewise the insurer must disclose all facts about the terms and cover of the policy. If either party conceals or misrepr …