Principles of insurance

1. Indemnity – Insurance is a contract of indemnity where the insurance company indemnifies the insured against certain risks for a consideration known as premium.
2. Insurable interest – means the loss of which will directly affect the insured.
3. Utmost good faith – means that the insured and the insurance company will not willfully hide anything from each other.
4. Mitigation – means the insured will not behave irresponsibly and will take due care so that the risk of loss or the loss is minimized.
5. Subrogation – means the insurance company acquires legal rights to act on behalf of the insured i.e. the insurance company steps into the shoes of the insured.
6. Causa Proxima or Proximate Cause – means the proximate cause of loss to ascertain whether the loss is covered under the policy.