Question: What Do You Mean By Insurance And Explain The Principle Of Insurance?

What is principle mean?

1 : a general or basic truth on which other truths or theories can be based scientific principles.

2 : a rule of conduct based on beliefs of what is right and wrong.

3 : a law or fact of nature which makes possible the working of a machine or device the principle of magnetism..

What does Principal mean in insurance?

An agent is a person authorized to act on behalf of another person, who is called the principal. In the field of insurance, the principal is the insurance company and the sales representative or producer is the agent. … Payment to the agent, within the scope of his or her authority, is payment to the principal.

The principle of indemnity is one of the most important legal principles in the field of insurance. The principle of indemnity states that the insured should not profit from a covered loss but should be restored to approximately the same financial position that existed prior to the loss.

What are the four principles of insurance?

Principles Of InsuranceUtmost Good Faith.Proximate Cause.Insurable Interest.Indemnity.Subrogation.Contribution.Loss Minimization.

How do you explain insurance?

Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients’ risks to make payments more affordable for the insured.

What is principal amount with example?

The total amount of money borrowed (or invested), not including any interest or dividends. Example: Alex borrows $1,000 from the bank. The Principal of the loan is $1,000.