Professional Documents
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Chapter 4
Fundamentals of Insurance Contracts
Chapter 4: Agenda
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Chapter four:
Fundamentals of Insurance contracts
1. 4.1.1.Principle of indemnity.
3. 4.1.3.Principle of subrogation
Indemnification : Meaning
Principle of indemnity
?
Principle of indemnity ?
The most fundamental legal principles in insurance.
Mostly in property insurance but also in liability insurance
contracts.
Why?
Example
Gambling ?
Moral Hazard ?
Determination of actual cash value (ACV)
1. Valued policy
4. Life Insurance
4.1.1.PRINCIPLE OF INDEMNITY
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Principle of indemnity
Meaning:
It states that “the insured must be in a position to lose
financially if a loss occurs”
Example : You have insurable interest on:
Your life, your spouses , children's (conditionally) life
Your own properties
Your own activities
Etc
4.1.2. PRINCIPLE OF INSURABLE INTEREST
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PURPOSES of insurable interest
1. TO PREVENT GAMBLING
Otherwise: One person could similarly insure the life of another
person and hope for an early death.
Meaning :
Means “Substitution of the insurer in place of the
insured for claiming indemnity from a third person
for a loss covered by insurance”
Example:
4.1.3. PRINCIPLE OF SUBROGATION
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• Purposes of subrogation
To prevents the insured from double collection
It includes:
URPOSE
Element # 1. Offer & Acceptance
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It includes:
Elements
1. Offer and acceptance of VALID
2. Considerations
Insurance
3. Competent parties
CONTRA
4. Legal purpose
CT
URPOSE
4.3. Unique Characteristics Of Insurance
The insured must accept the entire contract, with all its
terms and conditions.
Do Good,
Do It Well,
Do It Your Way!