Function Purpose Insurance

The main function of insurance is as a mechanism for the transfer / transfer risk or a risk transfer mechanism, which transfer risk from one party to the other party, namely the insured that the insurer. The transfer of risk does not mean eliminating the possibility of misfortune, but the insurer to provide financial security facilities or financial security and tranquility or peace of mind for the insured. In return, the insured is obliged to pay premiums in a relatively small amount when compared with the potential losses that might be natural.
Basic Principles of Insurance:

The basic principles that must be met by institutions or companies engaged in the insurance business are:

   1. Insurable interest is the right to insure arising from a
       the financial relationship between the insured and the insured with recognized
      legally.
   2. Utmost good faith is An action to disclose accurately and
       complete, all the material facts or material fact regarding something that will
      whether requested or not insured. The meaning is: insurer must
      honestly explain clearly everything about the extent
       terms / conditions of the insurer and the insured must also provide information
       clear and correct for objects or interests of the insured.
   3. Proximate cause is a cause of an active, efficient cause that chain
      events that give rise to a result without the intervention of the start
       and actively from new and independent source.
   4. Indemnity is a mechanism by which the insurer provide
      financial compensation to put the insured in the position
     finance that he had prior to the loss.
   5. Subrogation is the transfer of rights to demand from the insured to the insurer
       after claims are paid.
   6. Contribution is the Right of the insurer to invite other
      equally bear, but does not have the same obligations to
     insured to help provide indemnity.