Principles of insurance

Which principle in insurance contracts mandates the disclosure of all relevant information by both the insurer and the insured?

• a) Subrogation
• b) Insurable Interest
• c) Utmost Good Faith
• d) Indemnity

Answer explanation

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What does insurable interest mean in insurance policies?

• a) It ensures the insured party is compensated for the actual amount of loss suffered.
• b) It prevents fraudulent claims.
• c) The policyholder would suffer a financial loss if the subject matter of the policy were damaged or destroyed.
• d) It allows for double recovery for the same loss.

Which principle ensures that the insured party is restored to the same financial position as before the loss?

• a) Subrogation
• b) Indemnity
• c) Contribution
• d) Proximate Cause

If a person's car is damaged in an accident and the repair costs amount to €2,000, what will the insurance policy cover?

• a) The repair costs plus additional financial gain.
• b) The actual cost of repairs, up to the policy limit.
• c) Only a portion of the repair costs.
• d) Nothing, as the accident wasn't the fault of the insured.

What principle deals with over insurance in insurance contracts?

• a) Subrogation
• b) Contribution
• c) Indemnity
• d) Loss Minimisation

If a person insures the same property twice, what principle dictates how the compensation payout is handled?

• a) Proximate Cause
• b) Average Clause
• c) Loss Minimisation
• d) Contribution

Which principle allows the insurer to take over the insured's right to sue a third party for damages?

• a) Subrogation
• b) Indemnity
• c) Utmost Good Faith
• d) Average Clause

What determines whether an insurance policy covers a loss when multiple causes contribute to it?

• a) Indemnity
• b) Contribution
• c) Proximate Cause
• d) Loss Minimisation

What is the insured's responsibility regarding loss minimization in the event of an accident?

• a) They should maximize the loss to get a higher insurance payout.
• b) They should try to minimize the loss and control any possible damages.
• c) They should leave the scene and let the insurance handle it.
• d) They should file multiple claims to ensure they get compensated.

Which principle in insurance is used to determine fair compensation for partial loss or damage to an insured person's property?

• a) Loss Minimisation
• b) Subrogation
• c) Average Clause
• d) Proximate Cause