- Utmost Good Faith (Uberrimae Fidei): Both parties (the insurer and the insured) must act honestly and disclose all relevant facts, ensuring transparency in the insurance contract.
- Insurable Interest: The insured must have a legitimate interest in the subject matter of the insurance. This means that the insured will suffer a financial loss if the insured event occurs.
- Indemnity: Insurance is designed to restore the insured to their financial position before a loss occurs, rather than allowing them to profit from the insurance payout.
- Subrogation: After paying a claim, the insurer has the right to pursue any third party responsible for the loss to recover the amount paid to the insured.
- Contribution: If multiple insurance policies cover the same risk, the insured can claim from each insurer proportionately to their coverage. This prevents the insured from profiting from multiple claims.
- Loss Minimization: The insured is expected to take reasonable steps to minimize losses or damages. This principle encourages responsible behavior and risk management.
- Risk Pooling: Insurance operates on the principle of pooling risks from many individuals to spread the financial impact of losses, allowing for more affordable premiums for all insured parties.