The insurance contract contains two different natures. One refers to the insurance of damages, and the other to the insurance of people, concepts that, although they can resemble in principle, in this article, we will see that they are opposite.
What is Damage Insurance?
Damage insurance will be responsible exclusively for repairing the damages suffered by the insured, there being a direct relationship between the covered warranty and the injuries suffered.
Its nature is compensatory so that the insured can never obtain any benefit. At most, you will restore your situation. You will return to the exact point just before the incident occurred.
It would be best if you did not profit from damage insurance.
The Insurance Contract Law exposes articles that make obtaining any insured benefit with insurance difficult. Let us mention the most prominent:
Insured Interest
The owner of the covered asset receives the compensation. You cannot repair damage to someone who has not suffered it.
Sum Assured
It will be the maximum amount that the insurer will pay to the affected. Two values will determine the amount to be repaid: the damages produced and the sum insured. The total that the insurer will receive will be the smallest amount between those two values.
Underinsurance
Underinsurance is the case that occurs when the sum insured is less than the value of the insured good. If an accident occurs, in this case, the compensation will be the maximum of the sum insured. But if the incident is partial, the thing is complicated since the affected party will only receive an amount in proportion to the capital. How is this figure calculated?
With an established formula, we call the proportional rule:
Insured Sum and Damage Value
Over-insurance
Over-insurance would be the opposite of the previous when the sum insured is greater than the guaranteed substantial value. The insured will only receive the amount of the value of the damage that has occurred, the insured amount. But you will be thinking, would the difference that paid more lose it? No, of course not. The insurer would return that part that was overpaid.
Coinsurance
When we ensure an object by insurers, this procedure is legal and, in principle, does not have to be a problem as long as the total amount insured does not exceed the absolute value of the asset. If this were the case, the procedure followed would be the same as in the previous point.
Subrogation
In this case, we are facing a transfer of rights of the insured to the insurer. This process occurs when there is a third person responsible for the incident. With this, the company manages to claim from the person causing the accident the amount he had previously paid to his insured.
What is personal insurance?
Here, the situation changes completely. There is no longer a relationship between the covered warranty and the damage suffered. As with damage insurance, reversing to the point before the accident is impossible.
In the case of death or amputation of a member, it is impossible to repair the damage caused. In these cases, people insurance gives the affected party or beneficiary an amount previously agreed upon and reflected in the policy.
As it is impossible to calculate the value of human life, here we are not talking about compensation but the nature of savings or capitalization. Capitalization means that the insured will pay fees for what may happen in the future through salvation.
Summary
In summary, damage insurance focuses on compensatory measures to restore the insured’s situation after an incident, ensuring no profit is gained. The intricate nature of insured interest, sum assured, underinsurance, over-insurance, coinsurance, and subrogation form a legal framework that restricts unwarranted benefits. On the contrary, personal insurance diverges by offering predetermined amounts in the face of irreparable damages like death or amputation, emphasizing a form of savings or capitalization rather than mere compensation.
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