Insurance law - Research Paper Example

The insured party is not compensated by the insurer. This type of policy is commonly taken by those owning automobile. 2. Third-party, theft and fire. This type of cover is an extension of the third-party cover by including risks associated with theft and fire. The risks covers the policyholder only not the third party. 3. Comprehensive cover: this type of covers insures the insured plus the other party who incurred loss caused by the inured party. Comprehensive cover is more advantageous than third party insurance.

One is returned back to the level he/she was before the predetermined risk occurred Insurance just like any field has to have its principles to ensure a fair playing field among the involved parties. These principles are regarded as the pillars of insurance and ingredients for transformation. This principle gives the policyholder who has been insured against a predetermined the right to be compensated. The compensation should restore the policyholder back to where he/she was before the risk occurs.

Therefore, one should not expect to be paid much than what he/she suffered as a result of the risk. Insurance is a contract and thus, requires information from both parties to be bias free. It is from the information that premium is calculated and therefore, information inconsistency and inaccuracy may lead to wrong premium calculation and interfere with compensation. Health insurance is most affected with this principle since any omission in the health satus of the insured might compel the insurer not to compensate the insured in case a risk occurred and the insurer had no information regarding certain element of the health status of the insured.

This principle covers the issue surrounding premium. An insured party is expected to pay a predetermined amount of cash referred to as premium for him/her to be compensated when a risk occurs. Failure to pay the agreed amount might result for one not being compensated in case a risk