The Six Foundations of Insurance

Insurance agencies run off a number of foundational principles. Familiarity with these principles will help you understand the ins and outs of insurance, and how we best do our job. These six foundational principles reduce the risk for both insurance companies, like us, and their clients.

Utmost Good Faith

When we take on a client, we expect the client’s utmost honesty in reporting the value of the assets we insure. And it is our obligation to be honest in telling you about possible reductions or potential devaluations of your coverage.

Insurable Interest

This is straightforward: you can only insure that which you own (with the exception of renter’s insurance). You can’t insure your neighbor’s house– damage to their home won’t cause you financial loss.


We will only cover an equal compensation of your loss. No more, no less– leaving you in the position you were before the loss or damage was incurred. There are exceptions of course, such as in the case of life insurance.

Proximate Cause

Coverage depends on the cause. Homeowners insurance will probably cover wind damage from a storm, but not damage caused by flooding in the same storm.


You can’t hold more than one insurer responsible for compensation for loss. If you have two policies for your vehicle, the damages would be covered in a shared compensation.


If you are in a car accident, and your insurer pays for the damage incurred, they then have the right to sue the third party (the other motorist). Subrogation allows for this transfer of legal action. This allows insurers to recoup their losses.

We hope a clearer understanding of how we operate, as a family-owned insurance agency, will give clarity to your future insurance dealings! Questions? Call BMR Insurance Agency today at 714-838-1911 for a free quote.

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