Principles of Marine Insurance

1. Principle of Good faith – Parties demand absolute trust on the part of both; the insurer and the guaranteed.

2. Principle of Proximate Cause – The proximate cause is not adjacent in time; also, it is inefficient. Nevertheless, it is the definitive and adequate cause of loss.

3. Principle of Insurable Interest – Any object presented as a marine risk and the assured covering the insurance of goods – both should have legal relevance. Also, a series is devoted called ‘Incoterms’ to respectfully assign the insurance of goods to each party.

4. Principle of Indemnity – The insurance extended to the parties will only be applicable up to the loss. The parties can’t buy insurance to gain profits. If they do, they won’t get more than the actual loss.

5. Principle of Contribution – Sometimes, the risk coverage for goods has more than one insurer. In such cases, the amount has to be fairly distributed amongst the insurers.