Insurances: Principle of Indemnity, Contribution and Subrogation

Description

This Skill Bit explains key principles in insurance, starting with the principle of indemnity, which ensures compensation for actual losses rather than profit, thereby discouraging fraud and maintaining fair premiums. It also covers the principle of contribution, where multiple insurers share the cost of a loss proportionally to prevent over-recovery. Lastly, it discusses subrogation, allowing insurers to assume the insured’s right to recover losses from a liable third party after a payout, preventing double recovery and helping to keep premiums low.

Duration approx. 4 Min.

Tier: proficiency