Six Fundamental laws of Insurance

1. Indemnity : Insurance company covers the actual loss of policyholder/Insured.
2. Insurable Interest : The loss incurred must affect insured directly.
3. Utmost good faith/uberrima fides: Insurance company must conceal personal information about policyholder.
4. Subrogation : Insurance company gets legal rights to act on behalf of insured.
5. Cause of Proxima/proximate cause : Actual cause of loss.
6. Contribution : When claim is to be settled by one or more insurance compnies this concept comes into picture.

Key terms of Insurance

Insured : The person whose life is insured
Policyholder: The person responsible for paying premiums.

Note...insured and policyholder need not be same everytime.

Example...A father(policyholder) can take policy for his wife or children(insured)

Insurer: The company providing insurance benefits or selling policies.
Premium: The amount charged to policyholder for given policy.