Health insurance
is one of the most, if not the most, important types of coverage anyone
can have. The whole purpose of health insurance is to provide coverage
of costs to an individual’s medical expenses. The basic tenets of
effective health insurance include the Principles of: Utmost Good Faith,
Loss Minimization, Proximate Cause, Indemnity, Contribution, Insurable Interest, and Subrogation. The Principe of Utmost Faith, also known in Latin as Principle of Uberrimae fidei,
implies that both the insurer and the person getting insurance must
both go into the contract in good faith. It is up to the insured to
fully disclose completely true information that pertains to the matter
of insurance. Likewise, it is the responsibility of the insurer to
provide truthful information in regards to the insurance coverage being
provided which includes disclosing all material facts and not concealing
any relevant information, as well as not misrepresenting any
information related to the insurance. The
second tenet of health insurance I am going to discuss is The Principle
of Loss Minimization. This basically implies that the insured must put
in his/her best effort to protect their insured property from damage
and/or loss. According to this principle, the insured shouldn’t act
neglectful or irresponsible
during such scenarios as a fire where personal property is at risk,
just because he/she is insured. It is his/her responsibility to protect
the property from loss. A common example of this would be when you are
cooking and a grease fire starts, but you neglect to make any effort in
putting a stop to this fire because you have homeowner’s insurance.  The
next tenet of health insurance is the Principle of Proximate Cause,
which means that when the cause of a loss is due to more than one cause,
the closest cause is the one that should be used to determine the
liability of the insurer. In order to find out if the liability for the
loss lies on the insurer or not, the proximate cause should be looked
into, the remote cause should not. An example of this would be when an
animal chews through water pipes and causes a leak in your house. The
closest cause would be the water causing the flooding, and since this is usually covered under homeowner’s insurance, the insurer would be liable for the damage. The Principle of Indemnity is another tenet of health insurance. Indemnity is when something (or someone) is protected against loss of damage. This
principle states that the purpose of insurance is to put the insured
into the same financial situation he/she was in before a loss occurred.
According to this, the sole purpose of an insurance contract is to
compensate the insurer for a loss, but not to overcompensate. The Principle of Contribution is another tenet of health insurance which is a corollary of The Principle of Indemnity. If the insured takes out multiple policies on the same subject matter, then the Principle of Contribution applies to all contracts indemnity. According
to this principle, when an insured’s loss is covered by more than two
policies, he/she can’t recover more than an indemnity. The insured can
only claim for compensation from the actual value of the loss from one insurer, and cannot go to another insurer and claim the same loss in order to make a profit. Another tenet of health insurance is the Principle of Insurable Interest. This tenet states that the insured must suffer a financial loss due to the damage and/or loss of
the object they have insured. A good example of this would be if a
person makes their living creating videos for an online community such
as YouTube and they have their camera insured. If this camera is damaged
they will not be able to make any videos and therefore will not be able
to make any money. The final tent of health insurance is the Principle of Subrogation, which is an extension and corollary of the principle of indemnity, and applies to all contracts of indemnity as well. Subrogation is when something is switched out or substituted for another. This
principle states that if the insureds property is lost due to damage,
the ownership of the property is passed on to the insurer after the
insured has been compensated.