INSURANCE SERVICES-PRINCIPLES AND TYPES:-

MEANING:- Insurance is a contract between two parties in which one party agrees to compensate the loss suffered by other party for a consideration of money, known as insurance premium.

1- Insurer: The party which agrees to compensate the loss is called Insurer. It is also known as Insur Company.

2- Insured: The person or the property which are insured, is called insured.

3- Premium: It is the amount which is paid to the insurance company for risk cover.

PRINCIPLES OF INSURANCE:–

1- Principle Of Utmost Faith: According to this principle, insurance is a contract believed. Both parties disclose all the important facts regarding insurance policy to each other. Both parties should not hide any fact related to insurance policy to each other. 

2-Principle Of Insurable Interest: According to this principle, the insured must have an Insurable interest in the subject matter [person/thing] of insurance. Insurable interest means economic interest in the subject matter of insurance.

Example: A person can take life insurance policy for his wife, children but not take for his neighbors. 

3- Principle of Indemnity: Indemnity means compensation against law. According to this principle, insurance is not a contract of profit making but it is a contract to bring back the person's financial position in the same as he was before the loss. 

4- Principle Of Contribution: According to this principle, if a person has taking more than one insurance policy for the same subject matter from the different insurance companies, then on the happening of any event, loss will be contributed proportionately from each insurance company for the same subject matter. 

Formulae for contribution-

Proportionately loss suffered by each company =

loss of subject matter×Amount of each Insurance Policy 

-------------------------------------------------

    Amount of total Insurance Policy

5- Principle Of Subrogation: According to this principle, the insurance company gets all the rights over subject matter which has been damaged, after paying compensation to the insured. The insured person can not get benefit from the sale of damaged goods.

6- Principle Of Causa Proxima: According to this principle, the insurer is liable for the loss only when such loss is nearly caused by dangers which are stated in the policy. If loss is due to some other causes then, the insurance company can deny to pay the compensation.

7- Principle Of Mitigation Of Loss:

According to this principle, it is the duty of person to take the reasonable steps to minimize the loss to the insured property. Keeping in mind, it is owned property. The person should not become careless of his property after taking insurance.

TYPES OF INSURANCE:-

1- Life Insurance: In life insurance, the sum assured is paid at the death or an maturity period whichever comes earlier. For fixing the premium amount the insurance companies rely on the statistics of mortality (death) and morbidity (illness). 

The principle if Indemnity, principle of contribution and principle of Subrogation are not applicable to life insurance policy. In life insurance, insured is called assured.

The common policies are:

i- Jivan And

ii- Jivan Mitra 

iii- Jivan Sathi

iv- Jivan Kishore, etc...

2- Fire Insurance: Fire Insurance policy provides protection against the loss or damage by fire, lightning and explosion. Fire means actual fire and ignition and it should be accidental, not intentional. Fire policy covers loss through fire caused by riot, civil strife, rebellion or foreign enemy.

All the principles of Insurance are applicable on fire insurance.

3- Marine Insurance: Marine Insurance is a contract under which the insurer undertakes to indemnify the insured against marine losses. Marine risks are the perils of the sea e.g., storm, collision, capture, seizure, sinking of ship, etc..

The different types of Marine Insurance policies are:–

i- Cargo Insurance: This form of Marine Insurance includes the cargo or goods contained in the ship and the personal belongings of the crew and passengers.

ii- Hull Insurance: Under this the whole ship is insured. It covers the insurance of the vessel and it's equipments i.e. furniture, fittings, tools, machinery, fuel, engine, etc..

iii- Freight Insurance: Such insurance provides protection against the loss of freight.

4- Health Insurance: Health insurance provides for payment of medical expenses in case of illness of the insured person and his family. 

It provides the following types of coverage:

i- Basic Medical Expenses: It covers the expenses of hospitalisation and doctor's services.

ii- Major Medical Expenses: It covers the cost the catastrophic (sudden disaster) illness.

iii- Long–term hospitalisation: It covers nursing home charges for elderly people.

iv- Medical Supplement: It fills gaps in medicare proges of social security.

v– Disability Income: It replaced the income lost by the insured while the insured is unable to work.