Month: February 2015

Getting To Know The Different Principles Of Insurance


Insurance is a very serious business as it involves a lot of risk for the insurer.  If the insurer makes a wrong judgment and provides an insurance policy to an individual or entity, that minor miscalculation in their risk assessment may end up costing them a lot in the end.  This is why it is forgivable to say that insurers can sometimes be very strict when it comes to providing and releasing claims made by their policyholders.  Even so, while a strict by-the-book act can be an acceptable demeanor, still it does not justify the fact that some insurers can be just downright shrewd and unapproachable, especially when it comes to concerns about filing and making claims.

Most of the time, insurers are in the blind in regards to the actual value of the items being insured to them.  This in turn leaves them vulnerable to fraudulent individuals who are trying to take advantage of the loophole in an attempt gain monetary or financial benefits from themselves.  As a means of protecting themselves (insurance companies) from any risk of fraud or anything that is to their disadvantage, insurance companies have built six Principles of Insurance which they strictly abide by to protect themselves from any unnecessary risks.

The Six Principles of Insurance are as follows:

  1. Principle of Utmost Good Faith
  2. Principle of Insurable Interest
  3. Principle of Indemnity
  4. Principle of Proximate Cause
  5. Principle of Subrogation
  6. Principle of Contribution

All these six principles provide certain codes or values that are indispensable in the protection of the best interest of the insurer from any fraud or scheme that tries to cheat their established system.  By strictly adhering to the philosophies involved within each principle of insurance, insurance companies are able to sustain, an almost, risk-free business fortitude.  Thanks to these principles, insurers are able to effectively assess insurance risks and simply deny any individual or entity of any insurance policy if the insurer is doubtful or deems that the clients who are getting insurance are in this to create fraud.

The first two principles are delved into the value that they imply.  However, both have the innate capacity of denying insurance to individuals that attempt to commit fraud.  The middle two also implies certain values and aspects for certain circumstances.  Nevertheless, both attempt to cover cost and compensation over loss, but with strict adherence to the amount of claim or type of coverage to get compensation for claim.  The last two principles basically has cover on the amount of claims, especially on dual insurance policies by the insured from two different insurers.  The latter and last principle emphasizes the sharing of claims, whereas the principle prior to the last one states the responsibility of the insurer and what likely action they will take as compensation for loss from damages caused by a third party.

Professional Liability Insurance – A Necessity For Professionals


Professionals who provide their expert services to clients and customers are always at risk of being sued by unsatisfied clients, the likes many of which do not really get satisfied no matter what you do for them.  These are the clients you would like to avoid dealing with at all cost, but since you can never really determine which of them is which, then what the professional has to do is simply provide the best service he or she can provide; and that those who sue you have their own rights, even though their cause may not be exactly considered as appropriate under ethical standards.

VerkehrsunfallProfessionals who can benefit having professional liability insurance are not limited to just medical professionals and those in the healthcare business.  Contractors, engineers, architects, real estate agents, accountants, lawyers, bookkeepers, employment agents,  land surveyor, and many other professional professions all benefit in having professional liability insurance because if they have this insurance, even if they get sued for malpractice, professional mistake, or human error with their client-oriented services, they will have the backing of an insurance company that will shoulder all the necessary costs and expenses brought about by the litigation proceedings.

If you practice as a professional that provides expert advice or consultation, you provide professional trade services, or your profession requires you and allows you to handle sensitive information of your client, any mistake, calculation error, taxation and accounting error, or infringement made by you gives your client the right to sue you.  Of course, given that the client has the right to sue your for such, it is also your right to defend yourself in court to prove that there were no negligence, mistakes, or errors on your part that would warrant you a lawsuit.

The protection you can get for having professional liability insurance is invaluable as lawsuits made unto you under your professional services will require a lot of expenditures.  If you do not have the assistance of an insurance company on your expenses, the overall cost can be ridiculously high that some professionals who failed or ignored to buy professional liability insurance even ended up getting bankrupt due to the many expenses they have to shoulder along with the court-decided settlement they are required to pay the affiant, should they inexplicably lose the lawsuit case.  This is the very reason why it is important for professionals to protect themselves with professional liability insurance.