When deciding whether to hire a lawyer to help you deal with a personal injury case, you should start by defining an insurance contract. Doing so will help you to understand better more about the agreement and what the lawyer can do for you. An insurance contract is created by specified basic principles that are usually open to interpretation, which is where the lawyer comes in. Brief explanations of the principles are given below.
Utmost Good Faith
This principle states that both the insurer and the insured should act in good faith with regards to each other. Both parties must also provide clear and accurate information concerning the terms and conditions stipulated in the contract. The principle is quite basic and necessary due to the nature of service the insurer provides, which is to provide the insured party with security. It also protects the insurance company from possible scammers.
The insured party must have an insurable interest in the insurance contract. The subject’s owner has an insurable interest, which seizes to be the case when he or she stops to be the owner. This principle is mostly applied in auto insurance and is known to lead to issues at times. It becomes a challenge when the person driving the vehicle in question does not own it. Without this principle in a contract, a complainant may not know whether to file a claim with the insurance company of the car owner or driver.
Indemnity refers to the guarantee the insurer makes to restore the insured to the position she or he was before a loss, which is ideally done by compensation. The insurer will compensate the insured a sum amounting to the loss or the agreed maximum. The indemnity principle is usually part of the contract, which generally matters the most to the policyholders. In case loss does not happen within the time stipulated on the contract, compensation is not paid.
The insured can claim indemnity from all the insurance contracts that are involved in the claim. That, however, does not mean that you will get full compensation from all the policies, even if they are from different insurance companies. The companies will share the costs of the claim and ensure you get full compensation.
Subrogation refers to substituting one creditor for another. For example, you may get into a car accident. The insurer has to pay for your medical expenses and the car wreck. For that, the insurer assumes ownership of the medical costs and your car to file a lawsuit or claim.