Insurancecomes from the word that means the insurance coverage. Insurance is a contract between the insured or the customer to the insurer or the insurance company. The insurer was willing to bear some losses that may arise in the future after the insured agreed on the payment of money called a premium. The premium is the money spent by the insured as compensation to the insurer.
Formally, in law, Insurance is defined as an agreement between two or more parties, which party is binding to, by receiving insurance premiums, to reimburse the insured for loss, damage or loss of expected profit or responsibility law of a third party which may be suffered by the insured, arising from an uncertain occurrence, or provide a payment based on death or life of an insured person.
Based on the book of the Law of Commercial Law (Commercial code), Insurance or Coverage is defined as an agreement by which a binding to an insured, to receive a premium, to provide reimbursement to him for a loss, damage or loss of expected profit, which may be experienced as an event that is not certain.
The terms of the insurance agreement and the rights and obligations of both parties contained in an insurance policy. Examples of which insurance is life insurance, accident, loss, health and fire insurance.
Party risk that channel referred to as the "insured", this is the customer or society, delegate or transfer the risk to be received, while the party receiving the risks referred to as the "insurer" is the insurance companies that underwrite or replace the loss from the customer.
The agreement between the two parties is called policy. This policy is a legal contract that explains each of the terms and conditions are protected. fees paid by the "insured" to "insurer" for the risk borne referred to as "premium". It's a big premium value is generally determined by the "insurer" consisting of funds that can be claimed in the future, administrative costs, and profits.
Function Purpose Insurance
The primary function of insurance is a mechanism diversion / transfer of risk or risk transfer mechanism, which transfer risk from one party to the other party, namely the insured that the insurer. The transfer of risk is by no means eliminates the possibility of misfortune, but the insurer to provide financial security facilities or financial security and tranquility or peace of mind for the insured. In return, the insured is obligated to pay the premium in a relatively small amount when compared with the potential losses that might be natural.
Basic Principles of Insurance:
The basic principles that must be met by institutions or companies engaged in the business of insurance are:
Insurable interest is the legal right to insure arising from a financial relationship between the insured with the insured and legally.
Utmost good faith is a measure to express accurately and completely, all the material facts or material fact about something to be insured whether requested or not. What it means is: the insurer must honestly explain everything clearly about the extent of the terms / conditions of insurance and the insured must also provide a clear and correct for objects or interests of the insured.
Proximate cause is the active, efficient cause that chain of events that leads to a result without the intervention of the start and working actively from a new and independent source.
Indemnity is a mechanism by which the insurer to provide financial compensation to put the insured in a financial position that he had prior to the loss.
Subrogation is a transfer of rights demanded from the insured to the insurer after a claim has been paid.
Contribution is the Right of the insurer to invite more equally bear, but it does not have the same obligations to the insured to help provide indemnity.