III. Principles of Insurance 保險原則

Insurable interest is a legally recognised financial relationship between the insured and the subject matter: the insured benefits from its safety and suffers from its loss. Without it, an insurance contract cannot be enforced.

Definition · Importance of Insurable Interest · Its Essential Criteria · How It Arises · When Is It Needed? · Assignment

Insurance contracts are governed by utmost good faith: before the contract is made, both parties must volunteer all material facts accurately and fully, not merely avoid lying. If one side breaches the duty, the other may avoid the contract.

Ordinary Good Faith · Utmost Good Faith · Material Fact · When to Disclose Material Facts · Types of Breach of Utmost Good Faith · Remedies for Breach of Utmost Good Faith

The proximate cause is the dominant, effective cause that sets off the chain of events leading to a loss, judged by effectiveness rather than by timing. An insurer is liable only for loss proximately caused by an insured peril, and policy wording can widen or narrow how the principle operates.

Meaning and Importance of the Principle · Types of Peril · Application of the Principle · Policy Modification of the Principle

Indemnity means compensation after a loss that puts the insured back in the same financial position they were in immediately before it, no better and no worse, so the insured should not profit from a loss. Insurable interest caps how much indemnity can be paid, policy provisions can reduce it, and some provisions deliberately pay more.

Definition · Implications · Link with Insurable Interest · How Indemnity Is Provided · Salvage · Abandonment · Policy Provisions Preventing Indemnity · Policy Provisions Providing More Than Indemnity · The Practical Problems with Indemnity

Contribution is a corollary of indemnity: where two or more indemnity policies cover the same loss, the insured cannot recover more than the actual loss, and the insurers share the claim in rateable proportions. Policy conditions, such as the contribution condition, can change how the insured claims and how the insurers share the loss.

Equitable Doctrine of Contribution · Rateable Proportions · How Arising · How Applicable · How Amended by Policy Conditions

Subrogation is the insurer's right, once it has indemnified the insured, to stand in the insured's place and use the insured's rights and remedies against third parties to recover what it has paid. It follows from the principle of indemnity and stops the insured being compensated twice for the same loss.

Definition · How Arising · How Applicable · Other Considerations