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All insurance contracts are governed by the concept of 'offer and acceptance'. This requires you to fill the proposal form and send it to the insurance company. Sometimes you are also required to attach a check for the premium amount, with the proposal form

Your Complete the form and the proposal to the insurance company is the "offer" and if the insured accepts your proposal, it is the "acceptance" part of the concept. The amount you pay the premium as a "pay" part of the contract. The concept of "legal capacity" also applies to insurance contracts. It requires both parties legally in a position to enter a contract. Your insurance is based on "legal purpose", which means that the contact is not to promote illegal activities. The other legal principles which the contracts are:

Principle of the exemption:

This principle requires the insurer to pay no more than the actual damage in the event of loss. The amount of the claim because the insurance should not exceed the sum insured in the insurance contract. The aim is to make a claim amount will help to ensure that applicants to the financial situation is lost. In some contracts, compensation, the amount of the benefit of the insurance in the amount of actual losses. Some contracts also a compensation scheme for the right to be paid only if the actual losses over a certain amount. For example, in a car insurance contract of $ 3000, you would be for the amount only if your actual loss of more than $ 3000. In the event, the actual loss amount is less than 3000 U.S. Dollar, it would bear all costs.

Insurable interest

In this insurance, the insurance covers only the properties or events at the time of investment. For example, if your uncle's house and a residential building insurance, the insurance will reject the claim because you are not the owner of the property and not suffer any personal financial loss in case the building is damaged.

Principle of Subrogation

The principle of subrogation, the insured is entitled to the amount of revenue from the third party responsible for the loss. It allows the insurer, the legal process to determine the amount of losses that the company has paid the insured on the insurance case. For example, if you are injured in a traffic accident, reckless driving by a third party, the insurance will compensate your loss and Sue the third to claim the money paid.

Doctrine of utmost good faith

This means that the two parties is expected that they have all the information on the Treaty. For example, if the application for life insurance, it is your duty to disclose, constant complaints, you might have. Your insurer is also expected to be about the diseases that are not under the contract.

If you are unfamiliar with the principles, you will be able to understand the scope of your insurance contract. This makes you independent of the insurance consultant.

Joe Kenny writes for the UK personal loan store and offer more information about UK debt consolidation loans and other loan issues on site.
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