Proximate Cause: According to
this principle, an insurance policy is
designed to provide compensation only
for such losses as are caused by the
perils which are stated in the policy.
When the loss is the result of two or
more causes, the proximate cause
means the direct, the most dominant
and most effective cause of which the
loss is the natural consequence. In case
of loss arising out of any mishap, the
most proximate cause of the mishap
should be taken into consideration.
Subrogation: It refers to the right
of the insurer to stand in the place of
the insured, after settlement of a claim,
as far as the right of insured in respect
of recovery from an alternative source
is involved. After the insured is
compensated for the loss or damage to
the property insured by him/her the
right of ownership of such property
passes on to the insurer. This is
because the insured should not be
allowed to make any profit, by selling
the damaged property or in the case of
lost property being recovered.
Contribution: As per this principle
it is the right of an insurer who has paid
claim under an insurance, to call upon
other liable insurers to contribute for
the loss of payment. It implies, that in
case of double insurance, the insurers
are to share the losses in proportion to
the amount assured by each of them.
In case there is a loss, when there is
more than one policy on the same
property, the insured will have no right
to recover more than the full amount
of his actual loss. If the full amount is
recovered from one insurer the right to
obtain further payment from the other insurer will seize .