SCROLL DOWN TO DOWNLOAD
The main role of insurance is to pay the insured when a loss or misfortune occurs. However, note that payment is only made to those who have taken insurance cover. Insurance is based on trust of both the buyer (insured) and seller (insurer) of the insurance policy.
To make this trust work, insurance is governed by six main rules called principles.The principles include utmost good faith, insurable interest, proximate cause, indemnity, subrogation and contribution. While it is important to make you understand each of these principles, we shall today discuss the principle of Utmost Good Faith.
The principle of utmost good faith requires the insured to provide correct information to the insurer BE TRUTHFUL WHEN BUYING INSURANCE about the property or life being
insured. The insured must also tell the truth when making a claim following a loss.
When proposing to buy insurance,you will often be asked to fill aproposal form.
The proposal formis designed to obtain informationfrom you concerning the propertyorcontains relevant questions hasa section called declaration must sign to prove that all theinformation you have given in theform is correct and true to the bestof your knowledge and belief.Under ordinary commercialcontracts, one is given theopportunity to examine what theywant to buy and therefore make adecision based on what they haveseen. This is, however,
not the casewith insurance where the factsupon which the contract is basedare only known by the party buyinginsurance. For example, when oneis buying motor vehicle insurancethe insurer will ask for the value ofthe car, its model, make, age andthe like. This will make the insurerunderstand the level of risk in thecar. Such information will enablethe insurer to choose to insurethe car or not and therefore itmust be as accurate as possible.
It is the person buying property orlife insurance who knows all therisks he wants to insure, while theinsurance company does not knowyet it is expected to pay in the event of a loss. Further the principle of utmostgood faith is in essence a securityagainst fraud. This is because thereare some instances where somepeople present fraudulent claimsto insurance companies. Examplesinclude reporting theft of a carwhich has actually been sold off,
reporting injury in a road accidentyet the purported injuries weresustained elsewhere, presentinga relative for treatment under amedical policy while the relative isnot covered in the policy. Engagingin acts of dishonesty such as theseamounts to a breach of the duty of utmost good faith and can leadto a claim being declined and theclaimant being prosecuted in court.
The reason we have raised the need to be truthful with your insurer both at the time of buying insurance and whenreporting a claim is to avoidproblems insured personsface with insurancecompanies and also speed up theclaims payment process. Note thatthe insurance company can decideto cancel your policy as if it neverexisted or refuse to pay your claim completely if
LIFE INSURANCE ARTICLE
Life insurance is one of the essentials which an individual should have for the more contented future of his family in his absence. This article section will help you recognize the actual requirement of life insurance policy. Understanding the necessity of every individual, we at policybazaar.com have designed this page by focusing on all the products offered under this insurance, i.e. term plans, ULIP plans, child plans, pension and investment plans. Cracking up your queries and guiding you in the best possible way, we have got well researched articles for your better understanding.