Principle of utmost good faith
Insurance is a contract between two parties in which the insurer agrees on the payment of periodic premium to pay claims on the happening of a specified event o the insured after due verification. The principle demands that there should be no concealment of facts. The person who wants insurance of his goods, property, life, etc. must be absolutely open and state facts with utmost good faith to insurance company.
The principle of insurable interest
According to this fundamental principle of insurance, a person who has an insurable interest in something is entitled to insure it against any risk. In case the insured event occurs, the insurer must suffer a financial loss. He would then collect the financial loss on an insurance claim.
The indemnity principle
All insurance contacts with the exception of life insurance and personal accident insurance are contracts of indemnity. The indemnity principle states that no insured is to be allowed to make profit from a loss are compensated from the exact amount of the loss. If any policy holder makes a profit from the occurrence of any contingency insured against it will be against the public policy and thereby void.