Principles of Insurance - Class 11 Business Studies | 💡 Fatafat Concept

We're starting with a very important topic from our Class 11 curriculum called Principles of Insurance This topic from the business services chapter is a very important one and students often get confused by it So Bedia let's move forward without further delay The first principle is the principle of utmost good faith which is the foundational principle of insurance And this principle states that an insurance contract is one based on trust and confidence What is a contract that relies on trust This means that when taking out insurance an individual must provide the insurance company with all the facts and complete honest details If he隐瞒s the truth from them today and the truth was concealed from him yesterday and if an accident occurs involving his vehicle tomorrow the insurance company will not provide any compensation whatsoever I'll explain this to you more clearly with the help of an example Maliji was obtaining insurance and while doing so concealed the fact that he had a heart-related illness I have a heart-related condition because I've already had a heart attack as he kept these symptoms hidden And several months later after some more time had passed that person died of a heart attack In this case the insurance company will provide no coverage because the individual concealed the entire truth specifically failing to disclose that they had a heart-related condition In this case no composition will be awarded to him The next principle is our principle of insurable interest meaning the person making a claim on the composition He cannot claim rights to composition unless he also has the right to claim that property He should also have an interest otherwise if someone is taking out insurance it wouldn't make sense If someone is filing an insurance claim they will file it against their own property If I'm getting insurance coverage I can get it for my husband for my mother and even for my pets Because I'm not married So if anything happens I can claim credit for this composition on these very people If my friend's father were to pass away or if anything happened to him I wouldn't be able to file a claim for compensation So there should also be an interest in the subject matter right Then what comes next The next principle is indemnity meaning the insurance contract is not meant to create a profit This isn't a profit-making contract rather it means the insured should be restored to the same financial position they were in before the loss occurred—exactly as I’ll explain more clearly with an example The next principle is the principle of contribution What does it mean if a person has more than one insurance policy If a person holds more than one insurance policy for the same subject matter For the same thing the insurers will contribute the amount of the loss They will contribute the amount of the loss but a person cannot contribute a different amount and claim a different one separately For example a person insured their home for one lakh rupees against fire damage understanding it more thoroughly He took out insurance and then insurance again—now his shop caught fire and so did his home resulting in a loss of 75 000 rupees So what will he do He’ll pay him 50 He demanded 75 000 rupees and even more than 20 000—this isn't possible given the actual loss amount he incurred We'll pay him only after he delivers the goods—okay let's move on and see what's next What is NEX NEX refers to the principle of subrogation which means this is what it entails After the composition payment after the composition payment the insurer to the insured One must step into the shoes of the other—that is the insurer must see things from the insured's perspective What does it mean like one day the answer is complete for loss and damage to property answer by her and him The right to inherit proper property is the answer Mirri's scooter is missing An unfortunate case indeed The gang arrived and in the chaos a police officer was run over by a scooter There was a noticeable tension in his demeanor as if the police were about to arrive It hurts yet it doesn't Well let's see now—when the bar comes around again it finally arrives And when the entire house insured under the bar's fire policy gets destroyed in this case I'm covered by fire insurance The pants can't speak so they can't say "Pay me compensation " Because I had taken out fire insurance and the damage was due to whose negligence The issue arose because the bar's weight caused my house to collapse okay so what is the subject The matter is fire insurance okay Is it clear Then let's understand it better with the help of an example f a person has taken marine insurance for transporting the weed bags and if during transit a rat damages the weed no compensation will be provided as per marine insurance terms The cause of loss must be sea perils—what was the issue here The issue was precisely this If the weaver gives the warp threads to the loom then this is The composition won't be provided that's fine so the subject matter should be the same this is you You need to make sure okay then what comes next is the principle of mitigation of loss That means the insured must have complete ownership of the subject matter of their property So what is said here is that you must make your utmost effort at if any damage or accident is occurring in front of the eyes then you You just need to prevent it make it clear that's all there was to it If you enjoyed this video please don't forget to like share and comment Also be sure to comment in the wax about what you'd like to see in the next video so we can make it just for you The hand that holds the whip is the one that calls me Baba