How does a claim arise?
A claim may arise as a result of an insured item affected by a particular peril. The loss must result from a peril contained within the contract of insurance as evidenced by the policy document and it must not be the subject of policy exclusion.
The contact of insurance is subject to basic principles and a claim is bound to them:
- Utmost Good Faith:
both the insurer and the insured are under a duty to disclose to each all material facts that would influence each other’s decision to enter into the contract.
- Indemnity:
property and casualty insurance contracts are contra ts of indemnity- they seek to pace the insured after the loss in the same financial position that he enjoyed immediately prior to the loss.
- Insurable Interest:
the insured must stand in some relationship to the item insured, recognized by law, by reason of which he will benefit by its continued existence or be prejudiced by its damage or destruction
- Proximate Cause:
the insured must show that the loss was caused as a result of a peril covered by the policy
- Warranties:
placed by the insurer in the contract requiring the existence of a certain state of affairs or to the performance or non-performance of some act by the insured.
- Subrogation:
the right of an insurer, having provided an indemnity payment to the insured, to seek recovery from any third parties liable for the loss
- Contribution:
where more than one policy is issued covering the same risks, the insured may not recover in total more than a full indemnity.
- Average:
this is a mechanism used by an insurer that has the effects of making the insured his own insurer were there is under – insurance.
