Principles of Insurance 1

.........................emphasises on full disclosure of material facts related to the subject matter by both insurer and insured.

• Principle of the Utmost faith

• Principle of Subrogation

• Principle of Proximate cause

• NONE of the above.

Identify the Principle which says that,'The insured should have pecuniary interest in the subject matter'.

• Principle of the Utmost faith

• Principle of Contribution

• Principle of Indemnity

• Principle of Insurable Interest

Jeevan has insured his property with 2 insurance company Oman Insurance company and Continental Financial services for AED 2 million and AED 6 million respectively for fire. Due to fire he suffers a loss of AED 1 million and he files a claim for AED 1 million from each company. Will he get his claims? If not, why?

• Yes he will receive his claims.

• No. because he has violated Principle of Insurable Interest.

• No. because he has violated Principle of Contribution.

• No. because he has violated Principle of Indemnity.

Tom has insured his warehouse against fire. His warehouse catches fire due to electric short-circuit. However, he does not take any action to prevent fire thinking that ‘why he should bother as he is insured against fire’. Later the insurance company rejected his claim. Identify the principle of insurance that has been violated in the case above.

• Principle of mitigation.

• Principle of Insurable Interest

• Principle of indemnity

• Yes, his claim will be accepted.

After the claim, the right of the property is transferred to the Insurance Company. Under no circumstances, the insured is allowed to make any profit by sale of scrap. Identify the Principle.

• Principle of indemnity

• Principle of mitigation

• Principle of Subrogation

• Principle of proximate cause.

A cargo ship was insured against perils of sea. While the consignment was being loaded few rats also creeped along. During the Voyage, the rats made holes in the ship. Consequently, the sea water entered into the ship and the cargo was damaged. Will he get his claims? If not, why?

• Yes, he will get his claim.

• No he will not get his claim due to proximate cause.

• No he will not get his claim due to mitigation cause.

• No he will not get his claim due to subrogation cause.

Global Travel Ltd. gets all the buses insured for AED 20,000 each under comprehensive insurance policy. One of its bus met with an accident. The insurance company appointed its surveyor who assed that the loss was AED 5000 and the claim was paid. Identify the principle of insurance that is applicable in the case mentioned.

• Principle of indemnity

• Principle of mitigation.

• Principle of proximate cause.

• Principle of subrogation.

The central idea/s of an insurance is to make sure that:

• An insured is put back to the position as or she was before loss.

• As insured under no circumstance should make profit.

• As insured should have a cover over his risk.

• All the above.