Glossary
What are the principles of insurance?
Insurance rests on seven principles. Utmost good faith: tell the insurer everything material. Insurable interest: you must stand to lose if the event happens. Indemnity: you are restored to where you were, no better. Contribution: two policies share one loss. Subrogation: the insurer can recover from whoever caused the loss. Proximate cause: the main cause decides the claim. Loss minimisation: you must limit the damage.
In short
- Utmost good faith and insurable interest decide whether a policy is valid.
- Indemnity and contribution decide how much is paid.
- Subrogation and proximate cause decide who pays and why.
- Loss minimisation is your duty once something goes wrong.
The seven principles at a glance
| Principle | What it means in practice |
|---|---|
| Utmost good faith | Declare every material fact, such as a pre-existing illness. Hiding one is the strongest ground to reject a claim. |
| Insurable interest | You can insure only what you would lose by, such as your own property or your own life. |
| Indemnity | A loss is made good, not turned into a profit. Indemnity explained |
| Contribution | If two policies cover the same loss, they share it; the loss is not paid twice. |
| Subrogation | After paying you, the insurer can recover from a third party who caused the loss. |
| Proximate cause | The dominant cause of a loss decides whether it is covered. What counts as an accident |
| Loss minimisation | You must take reasonable steps to limit the damage, as if you had no insurance. |
Which principle causes the most claim disputes?
Utmost good faith. An undeclared condition is the commonest reason a health or life claim is contested. Declare everything, even if it means a waiting period or a small extra premium.
Do all principles apply to every policy?
Not all in the same way. Indemnity and contribution apply to health, property and liability cover. Life and personal accident cover pay a fixed benefit instead, so every such policy pays in full.
Frequently asked questions
What are the 7 principles of insurance?
Utmost good faith, insurable interest, indemnity, contribution, subrogation, proximate cause and loss minimisation.
What is the principle of contribution?
If two policies cover the same loss, the insurers share it, so the loss is not paid twice.
What is the principle of utmost good faith?
Both sides must disclose every material fact. For a buyer, that means declaring conditions like a pre-existing illness.
What happens when you talk to us
A 20-minute video call with a Growth Advisor. No obligation, and no quote pushed. It opens with a five-minute video from our founder on how the benefits stack works and why Ethika exists; the rest is your questions. You’ll leave with an honest read on your current cover and claims experience, and a straight answer on whether we can genuinely help, even if you never become a client.
20 minutes with a Growth Advisor. No obligation.
A note on this page. Everything here is general information, not insurance, legal, financial or tax advice, and nothing is an offer. No insurer or product is named or recommended. What any policy covers depends on its own wording and schedule. For advice about your situation, talk to us.