Top 5 Everlasting Principles of Insurance

Of certainty, principles ruled the world. For instance, Sir Isaac Newton propagated the acceleration due to gravity. That is whatever that go up must come down due to gravitational force. In like manner, insurance is subject to certain principles.

Of certainty, principles ruled the world. For instance, Sir Isaac Newton propagated the acceleration due to gravity. That is whatever that go up must come down due to gravitational force. In like manner, insurance is subject to certain principles. Then, what is insurance? Insurance is a contract, a risk transfer mechanism whereby a company (Underwriter) promised to compensate or indemnify another party (Policyholder) upon the payment of reasonable premium to the insurance company to cover the subject-matter of insurance. If you are well conversant with these principles, you will be in a better position in negotiating you insurance needs.

1. Insurable interest. This is the financial or monetary interest that the owner or possessor of property has in the subject-matter of insurance. The mere fact that it might be detrimental to him should a loss occurred because of his financial stake in that assets gives him the ability to insure the property. Castellin Vs Preston 1886.

2. Umberima fadei. It means utmost good faith, this principle stated that the parties to insurance contract must disclose accurately and fully all the facts material to the risk being proposed. That is to say that the insured must make known to the insurer all facts regarding the risk to be insured (Looker Vs Law Union and Rock 1928). Likewise, the underwriter must highlight and explain the terms, conditions and exceptions of the insurance policy. And the policy must be void of ‘small prints’.

3. Indemnity. It stated that following a loss, the insurer should ensure that they placed the insured in the exact financial position he enjoyed prior to the loss (Leppard Vs Excess).

4. Contribution. In a situation where two or more insurers is covering a particular risk, if a loss occurred, the insurers must contribute towards the settlement of the claim in accordance with their rateable proportion.

5. Subrogation. It has often been said that contribution and subrogation are corollary of indemnity, which means the afore-mentioned two principles operates so that indemnity does not fail. Subrogation operates mainly on motor insurance. When an accident occurred involving two or more vehicles, there must be tortfeasor(s) who is responsible for accident. On this basis, the insurer covering the policyholder who was not at fault can recover their outlay from the underwriter of the policyholder who is responsible for the incidence.


Top Five Ways to Reduce Car Insurance Premiums

There is always a mystery surrounding the car insurance premiums and how different people get a different deal. Some of them pay huge amounts for insuring their vehicle while some go away with the minimum. We can control paying premiums only when we can understand the formula of creating the rate. According to experts, all motor insurance prices are calculated after doing a risk benefit analysis, which is the main reason the providers charge different premiums from its customers.

It is clear now that you can pay lower rates if your vehicle poses lower risk to the insurer. This means that insurance is different for each car and depending on its usage, year of purchase, accidents and age of the driver, the insurance value can change. Apart from this, you can take certain measures on your end to lower down your car insurance premiums. Find the top five methods below!

Top five methods to reduce car insurance premiums:

Choose the right car: You must choose a lower risk vehicle to save on your motor insurance premiums. A pricey vehicle with lot of add-ons would also need higher repair costs and thus, prove to be on the higher end of insurance premium rates.

Age is synonymous to sanity in driving: Younger drivers are often found speeding and breaking traffic rules, which paves way to higher premiums. Normally, drivers aged between 16 and 25 pay higher premiums when compared to those between 26 and 65, provided they have a good licensing history.

Drunk driving costs you higher premiums: It is always a bad idea to drink and drive as it not only keeps you open to life threatening accidents but, also affects your career as well as leads to the invalidation of your car insurance. If you have a drinking habit, you would be certainly charged with higher premiums.

Corporate or business discounts: Based on your profession, you can get corporate discounts for motor insurance. You can also be benefited by gaining better rates as per your profession. Just check with your insurance provider on this matter and see how you can minimise the premiums.

Say no to traffic violation: Apart from the age and kind of vehicle, most of the insurers consider your driving skill and how accident friendly you are. Moreover, if you are someone who violates traffic laws and has a history of it then it increases the chances of getting charged with high premiums.

These are the factors that have a straight effect on your car insurance premiums and should be considered to get a lower discount. Make sure, you discuss all of them with your insurance provider and work out the least possible premiums. In addition, you should shop around to select the best car insurance provider in the UK.


Follow These Tips to Buy The Best Life Insurance Policy

In the year 1956, Life insurance sector was nationalized and in the same year Life Insurance Corporation came into existence. Since then, LIC has been making people aware about the importance and benefits of life insurance policy. But the real penetration of Insurance sector started after the entry of private players in the year 2000, due to privatization of the insurance sector. It extended the benefits and widened the reach of life insurance.
With the efforts of government and insurance companies, the number of people insured in India has increased a lot. But still many people don’t have the right life insurance policy. Many people don’t understand the various aspects of life insurance policy and end up buying a policy which gives them no benefit when required.
So through this article, we will look at some of the tips to buy the best life insurance policy.
Tip 1: Analyze your need for life insurance
You must understand your need for insurance. Your clear purpose for buying a life insurance will help you to filter your search in an appropriate manner. Now, life insurance policy isn’t only limited to protection against life, but it can also be used for various other purposes also. You may buy life insurance as a protection against loan or debt, investment option, saving option or as a retirement plan. For serving all these various purposes, there are different life insurance policies like Term Plan, Whole life plan, ULIP plans and you also need to customize your life insurance plan according to your need. So it is better to understand your basic need for buying a life insurance policy, which will help you get maximum benefit from the policy.
Tip 2: Decide the Right amount of Cover
The right amount of cover puts a strong base for making the best life insurance policy for you. A low amount of cover will keep you away from getting the right benefit while a high amount of cover will dig a big hole in your pocket. It is very much necessary to know how much cover you need. A right amount of cover is built upon the basic four pillars, which are, annual income, future obligations, inflation and debts. Keep all these factors in consideration to choose the right coverage amount which will help you to get what you expect from your policy.
Tip 3: Choose a plan as per your Risk Appetite
It is important to buy a life insurance product as per your need and risk appetite. If you want guaranteed returns on your policy, you should go for a traditional life insurance policy. If you have a high risk appetite and ready to take market risks, then you may opt for unit linked life insurance plan.
Tip 4: Compare Different Policies
Any product bought without comparison can make you pay a higher price with less benefit. Same goes with life insurance policy. It is very much necessary to compare life insurance plans of different companies. And with the availability of internet, comparing life insurance policy has become very easy. Insurance web aggregators provide a very easy and unbiased comparison of different life insurance companies. You can also visit websites of different insurance companies and know about the plan at brief.
Tip 5: Go through Fine Print
It is very much necessary to go through the fine print of the policy. There are many circumstances under which you are not covered in a life insurance policy and you must know them. A brochure of the policy contains all the details and is available on the insurer’s website. You must read every point of the brochure and if any questions arise, you must get it cleared as soon as possible. It will help you to understand the exclusion, inclusion, terms and conditions of the policy at brief.
Tip 6: Check the Insurer details
Always go for a trustworthy insurer. A good insurer will make your purchase, management and claim of policy very easy and quick. A good insurer will have an easy claim settlement process, better service, higher claim settlement ratio and good reviews. And you can check all these parameters very easily. Claim settlement process will be available on the insurer’s website while claim settlement ratio (issued by IRDAI) can be found very easily on the internet. You can read reviews of different insurer’s on blogs and articles of the insurance experts and on company’s website also.
Tip 7: Understand available Riders
Everything comes at a price and the same goes with the riders available with your policy. Riders available with your policy might look very attractive but you need to understand that every rider added to your policy, increases the rate of premium. Even if price is not a big concern for you still, every rider is not useful for everyone. You might add a rider and will be never be able to get benefit from it because you added it without understanding your needs. Riders can do wonders to your policy if required and can also prove to be useless and a very costly affair if not required.
A person with no life insurance cover is almost similar to the person with a wrong life insurance. Just buying a life insurance policy will add up to the number of persons insured in India and will not give you any benefit. So, it becomes very necessary to do a little research and understand your need, so that you can choose the best insurance policy for yourself.