Principles of Insurance Exam Study Notes

Subrogation ensures - Having paid the claim, the insurance company gets the right to make good the damages from the party who caused the loss, Having been indemnified by the insurer, the insured does not retain the right to get compensated by the party who caused the loss and thus make profit from insurance.
Insurer cannot profit - Subrogation ensures insurance company is entitled to recover money from the third party, but only to the extent it has paid as compensation to the insured person.
Principle of Contribution - The principle of contribution ensures that if there is more than one insurance policy drawn up on the same subject matter, the insured cannot recover their loss from all the insurers, in which case they will recover more than their loss, or even make a profit.
Contribution - The insured does not profit by making separate claims from multiple companies for the same event, Each insurer pays only their proportionate share of the loss, The principles of subrogation and contribution apply only to contracts of indemnity. So the two principles do not apply to life insurance contracts and similar contracts with fixed benefits.
Principle of utmost good faith - As per the principle of utmost good faith, the proposer is obliged to declare all relevant facts that are material to the assessment of the risk, at the time of making the proposal. This information is important for the insurer in deciding whether to accept the proposal and the appropriate premium to be charged.

Licentiate Examination - IC 01 - Principles of Insurance Exam - Important Points