Principles of compensation in insurance

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Principles of compensation in insurance

September 18, 2022 Insurance 0
Hjalmar Jesus Gibelli Gomez Principles of compensation in insurance

Indemnity can be defined as compensation or reward from an insurance company for having caused damage to a person or structure, either actively or passively to another person.

Compensation in turn can be considered the result of damage caused to another person. It is said that the damage may have been caused:

  • Willfully: Knowing what is going to do that damage.
  • In a guilty way: It is considered without the intention of wanting to do the damage, but being the direct responsibility of the person.

The insurance sector contemplates in its code of ethics a diversity of principles in which the principles of compensation, maximum good faith, insurable interest, subrogation, contribution, among other things, stand out.

The principle of indemnity does not apply to branches in which the damage suffered cannot be expressed in a certain value, as is the case with life and disability insurance.

Purpose of compensation

Hjalmar Jesus Gibelli Gomez Principles of compensation in insurance. 1024x768 - Principles of compensation in insurance

In addition, the purpose of the compensation will always be that the insured can return to the state prior to the accident and recover the affected assets.

At the same time, the characteristics of the insurance contracted by the affected person and the circumstances of the facts have a great influence, since the insured may be entitled to financial compensation in cash.

In this sense, the insured will be responsible for part of the compensation through the payment of a franchise or deductible.