The second principle is the principle of utmost good faith. This requires the insured party to include all material facts concerning the risk to be insured. This includes any information or fact that a prudent underwriter would consider relevant in calculating a premium. The omission of such can render a contract of insurance void. This duty applies at inception, on renewal or at any point during the currency of the contract.
Indemnity is a term that applies when the event insured against happens.
This implies that the insured will be returned to the position prior to the loss. In this event the insured must prove monetary loss, and prove the extent or value of the loss. If the insured has a right to a claim in respect of the loss against a third party, this right is transferred to the insurer. In all cases the Insurer will sue in the name of the insured because to allow the insured to recover in their own right would infringe the principle of indemnity. Contribution is a principle that applies when a risk is insured twice.