By definition, insurance is a term used to refer to an action, system, or business in which financial protection or compensation for the life, property, health and others will be compensated for by unforeseen events such as death , damage, loss, or illness and involves periodic premium payments within a specified period of time as a policy indemnity that guarantees the types of protection. In the law
Understanding insurance in Act No. 2 of 1992, insurance business is an agreement between two or more parties, where the insurer is willing to bind themselves to the insured as the recipient of insurance premiums to provide compensation to the insured due to loss, damage or loss of expected or is considered a third party liability that the insured may incur, arising from an uncertain event, or providing a payment based on the life or death of an insured person.
The agency that distributes the risk is then referred to as the "insured" and the body that impose the risk is hereinafter referred to as the "insurer". Where the agreement between the two bodies is referred to as a "policy" which is a legal contract in which it explains each protected terms and conditions. The costs which are then paid by the "insured" to the insurer for any such risk shall be referred to as "premiums" whose amount is usually determined by the "insurer" for future claimable funds, administrative costs, and investment benefits.
Another definition of insurance under the Commercial Code (KUHD) on insurance in Chapter 9, Article 246, states that "Insurance or Coverage is an agreement in which an insurer binds himself to an insured, accepting a premium, to provide for his replacement because of a loss, damage or loss of expected profits, which he may suffer because of an unspecified event. "
What are the Basic Principles in the World of Insurance?
In the insurance world there are 6 basic principles that need to be met, namely:
Insurable Interest:
A right to insure, arising from a financial relationship between the insured and the insured that has been legally recognized.
Utmost Good Faith:
An action to express accurately and completely all facts in the form of material (material fact) about something that will be insured whether requested or not. This means that the insurer must honestly explain clearly everything that is in accordance with the terms or conditions of the insurance. The insured party must also be able to provide a clear and true description of the object or interest insured.
Proximate Cause:
It is an active, efficient cause that causes a sequence of events that leads to a certain effect without active intervention or intervention from a new and independent source.
Indemnity:
A mechanism whereby the insurer provides a financial compensation in an attempt to place the insured in the financial position he / she owns prior to the occurrence of a loss (KUHD article 252, 253 and affirmed in article 278).
Subrogation:
Transfer of claim rights from the insured to the insurer after the claim is paid.
Contribution:
The right of the insurer to invite other insurers who jointly bear but do not have the same obligation to the insured to participate give indemnity.
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