Factors Determining the Premium
- The value of the risk — a higher potential payout means a higher premium.
- The probability of the risk occurring — a higher chance means a higher premium.
- The number of people insured against the same risk.
- The availability of past records — no records mean a higher premium.
- Measures the insured has taken to reduce the risk — more precautions can mean a lower premium.
- The value of money.
Why an Insurer May Refuse to Pay a Claim
If the loss was intentionally caused by the insured, if the insured defaulted on premium payments, if there’s no insurable interest, if the contract has expired without renewal, if the insured delayed informing the insurer, if the proximate cause principle wasn’t respected, if there’s no proof the loss matches what was insured, or if the proposal form wasn’t completed honestly.
Conditions for a Claim to Be Paid
- The insured loss must occur — it must be the loss that was insured against.
- Proof of the loss must be shown.
- No moral hazard — the insured must not have caused the loss themselves.
- Fast notification — the insurer must be told as early as possible.
- No breach of warranty — the insured must have followed the required safety rules.
