Insurance Principles Overview

It prevents the insured from collecting twice for the same loss and ensures that the negligent party is held responsible for the loss.

Subrogation only applies when the insurer has made a loss payment to the insured.

It helps to hold down insurance rates by ensuring that insurers can recover costs from negligent third parties.

<p>Subrogation does not apply to life insurance and most individual health insurance contracts.</p> Signup and view all the answers

<p>The insured could jeopardize their ability to recover losses and possibly face a denial of claims.</p> Signup and view all the answers

<p>A negligent party is one whose actions have caused harm or loss, making them liable for compensation to the insured.</p> Signup and view all the answers

<p>The insurer can only recover up to the amount it has paid under the policy.</p> Signup and view all the answers

<p>An insurer cannot subrogate against its own insureds, meaning it can't recover from those it insures.</p> Signup and view all the answers

<p>The house owner can claim under their own household insurance policy or make a claim against the plumber for negligence.</p> Signup and view all the answers

<p>The right to recover is transferred to the insurer, which can then sue the liable party on behalf of the insured.</p> Signup and view all the answers

<p>The principle of contribution involves the apportionment of liability among multiple insurers when there is double insurance covering the same risk.</p> Signup and view all the answers

<p>It applies when there are two or more indemnity policies that cover a common interest, common peril, and common subject matter.</p> Signup and view all the answers

<p>It allows insurers to pursue recovery from third parties after indemnifying the insured, reducing their financial loss.</p> Signup and view all the answers

<p>Arbitration is an alternative, where disputes can be settled by a single arbitrator if the parties agree.</p> Signup and view all the answers

<p>Once indemnified, the insurer steps into the insured's shoes to pursue any rights of action against third parties.</p> Signup and view all the answers

<p>If the insured claims and receives payment from their insurer, they lose the right to pursue claims against the negligent third party.</p> Signup and view all the answers

<p>Utmost good faith requires both parties in an insurance contract to act with honesty beyond ordinary commercial contracts, where Caveat emptor imposes responsibility solely on the buyer to be cautious.</p> Signup and view all the answers

<p>Insurable interest means that the insured must suffer a financial loss if a loss occurs, ensuring that they have a legitimate reason to seek coverage for the subject matter.</p> Signup and view all the answers

<p>Representations are statements made by the applicant that can make the contract voidable if they are material, false, and relied upon by the insurer.</p> Signup and view all the answers

<p>Indemnity ensures that an insured party is compensated for their loss to the extent of the financial damage, without profiting from the claim.</p> Signup and view all the answers

<p>Subrogation allows insurers to pursue recovery of claims from third parties responsible for the loss after compensating the insured, preserving their right to compensation.</p> Signup and view all the answers

<p>Concealment is the intentional failure to disclose a material fact, which can render the insurance contract voidable if relied upon by the insurer.</p> Signup and view all the answers

<p>A warranty is a statement incorporated into the insurance contract that must be true in all respects, whereas representations are statements made during the application process.</p> Signup and view all the answers

<p>Insured parties have the right to receive clear terms, fair treatment, and compensation for covered losses as stipulated in their policies.</p> Signup and view all the answers