Insurance is not new anymore in Indonesia. Already many people use insurance. However, not a few people who still do not understand how the concept of insurance, insurance principles, insurance benefits, even what is the understanding of insurance itself.
For those who do not understand, consider the following explanation to understand various things about insurance more fully and clearly.
Definition of Insurance
The definition of insurance is regulated in article 246 of the Indonesian Criminal Code. In that article, the definition of insurance is stated as “Insurance or coverage is an agreement, in which the insurer enjoying a premium binds himself to the insured to free the insured from loss due to loss, loss, or lack of expected benefits, which will be suffered by the insured because of an uncertain event. ”
The insurance coverage under this insurance principle is also regulated in article 246 of the KUHD. The insurance coverage contains the following elements:
1. The Existence of Parties
There are two main parties to insurance, namely the first party referred to as the guarantor and the second party called the insured. The two parties entered into a mutual agreement to insure a certain object with certain conditions.
2. There is a risk transition
In an insurance agreement, risk is also a key element that must be present. A person’s risk, both the risk to themselves and their belongings, can in principle be transferred to another party (the guarantor). This transition of risk can be done because someone can have limited ability to deal with various kinds of risks that can befall the insured at any time.
What is meant by premiums in insurance is the amount of money paid by the insured party to the guarantor. The amount of this premium is determined in the premium table and is used as a reward for guaranteeing the risk borne by the insurer.
4. Uncertain Events
Insurance covers a risk of an uncertain event. That is, the event that befalls the insured or the object of insurance is really not planned, can not be known, and never expected before.
If an undesirable event does occur and results in the insured suffering a loss, the insurer is obliged to pay compensation to the insured. The maximum value of this compensation is adjusted to the agreed agreement.
Also read: Definition, Conditions, Characteristics and Tax Classification
PURPOSES AND PRINCIPLES OF INSURANCE
1. Insurance Purpose
The purpose of insurance is also regulated in law. The purpose of insurance according to the law can be divided based on the parties. The following explanation:
The purpose of insurance for the insured, namely:
- Can delegate risk to the other party
- Can reduce the possibility of loss
- Possible losses can be avoided
- Can get compensation if a claim occurs
The purpose of insurance for the party responsible, is:
- Can provide protection against possible losses
- Receive premiums paid by the insured party
- Eliminates doubts for the company in running its business
- Get results for the services provided
- Give a boost to better economic development
2. Principles of Insurance
There are also important insurance principles to understand. The principle of insurance according to those listed in the insurance law there are five things. Here are the insurance principles:
a. The principle of indeminity
The principle of indemnity in insurance is a basic principle in insurance coverage, in the form of an obligation of the insurer to pay compensation to the insured party, if in fact there is a risk that results in the loss of the insured party.
b. Principle of Interest
Insurance law stipulates that an insured who wishes to close insurance coverage between his person (a prospective customer) and the object to be insured, then there must be a relationship or relationship or interest to the object insured, it can be a direct or indirect relationship.
c. The principle of subrogation
The principle of subrogation is when the insured party has the right to indeminity or the right to claim claims to the guarantor only, and he cannot sue the third party, because the insured’s rights are used by the insurer to sue the third party who acts as the cause of the risk.
For example, if the insured house experiences a fire due to negligence of a third party when burning rubbish in the yard near the insured house, then the third party that caused the fire can only be asked for cover by the guarantor.
d. Representative principle
The principle of representative is a form of obligation of the insured to provide true and also open data. This data must not be manipulated because the filling out of the policy must be based on honest information from the insured party.
With a variety of things that are well known, this can be considered by the guarantor to make a decision regarding the continuation of the insurance policy.
e. Principle of agency
In insurance, there is an agent which is a tool that will determine the progress of an insurance company. In this agency pattern, there are three parties involved, namely the principal, agent and third party.
Principal is a party that creates an agency relationship for a third party. Principals act as a source of authority for agents in their daily work.
Agent is a person or party entrusted by the principal with the job of selling poly to a third party. Agents are also entitled to get their rights in accordance with the provisions of the law. The rights of insurance agents include receiving commissions or professions, year-end bonuses and others that are in line with company policy.
Definition of events
In insurance, there are also elements that are meant by events. That is, events can be referred to as the cause of a risk. While the risk itself is also a result of an event.
Understanding the event itself can be interpreted as an event that can not be determined when it occurs according to the human mind, also can not be determined where it will occur and how much loss will occur. In essence, events in insurance are events that do not necessarily occur.
According to the law, events can be divided into two kinds. First, the event itself, namely when the event is the cause of a loss. If there were no such events, there would also be no losses.
Second, when the event occurs, it means that the loss must be borne because the insured event occurred.
Risk in insurance or in the general sense is the occurrence of events that are not as expected, especially regarding material losses, such as the condition of the reduced amount of goods, damage, lost, and so on. Risk is a form of burden that must be borne due to an event that causes material loss.
This loss must also not be the intent of the insured, but rather occurs because it is beyond the ability of the insured. According to insurance law, events that result in losses for the insured, raises the obligation of the guarantor to pay compensation, the amount of which is equal to the maximum value specified in the insurance policy.
Event and risk requirements for insurance
The law or law also regulates the conditions of events and risks in insurance, such as:
- The event could not be ascertained
- The event was not impossible
- That incident was unintentional
- Can be valued in money