Insurable interest. This refers to the interest one has in a property or business he is insuring. That is whether he stands to lose in the event of such a property / business suffers the risk that is being insured. Thus one cannot insure a friend’s property since in an event of risk occurring, he will not suffer the financial loss
Utmost good faith (contact of uberrimae fidei). This principle requires that a person who is applying for insurance to disclose all true relevant information and material facts about the property/ Business being insured. The insured is expected to say only the truth when applying for the insurance policy or when claiming the loss.
Subrogation. This states that in an event of a loss occurring and the insurer has fully settled an insured’s claim, the insurer requires the rights that insured hands in the property destroyed. This implies that any gain made out of the loss belongs to the insurer.
Indemnity. This principle states that the insured must only be compensated for the amount of the loss, so that he is restored to his/ her original financial position before the loss occurred. This enables the insurance company not to make profits for the insured
Contribution. This principle states that if a person insures his property with more than one insurance company (Co insurance), In case of a loss each company should pay a certain stated amount of money towards that loss. However the total payments (contribution) from each insurable company should not be more that the value of the property destroyed
Proximate cause. This principle states that there must be fairly a close connection between the cause of loss and the actual risks insured against to enable an insured to seek compensation. For instance if Mr. Matisko has his property insured against theft, but was destroyed by fire, he cannot be compensated because the cause of the accident (fire) is not the insured risk (theft)