Principles of Insurance Summative

What is the term for having a legitimate interest in the preservation of the insured item or person?

• Indemnity

• Pooling of risk

• Insurable interest

• Subrogation

The principle wherein an insurance policy reimburses the insured for actual losses incurred, ensuring they are restored to their financial position prior to the loss is?

• Utmost good faith

• Indemnity

• Contribution

• Loss minimization

Which principle gives insurers the right to claim proportionate reimbursement from other insurers when multiple policies cover the same risk, ensuring fair compensation without profit

• Subrogation

• Contribution

• Pooling of risk

• Insurable risks

Which principle allows an insurer to pursue recovery from a third party responsible for a loss after they have compensated the insured, preventing unjust enrichment

• Premium

• Loss minimization

• Indemnity

• Subrogation

Which principle requires the insured to take actions to reduce the severity or impact of a loss, demonstrating responsibility and care in managing insured risks.

• Pooling of risk

• Insurable interest

• Loss minimization

• Indemnity

This is the primary, direct cause of a loss, establishing a link between the insured event and the loss incurred, which must be shown for coverage to apply?

• Insurable interest

• Proximate cause

• Contribution

• Subrogation

Which principle requires both parties (the insurer and insured) to disclose all relevant information honestly, ensuring fairness in the insurance agreement?

• Premium

• Utmost good faith

• Pooling of risk

• Indemnity

Which principle involves gathering multiple insurance policies to spread the financial risk among many insured parties, minimizing the impact of individual losses on the insurer.

• Loss minimization

• Pooling of risk

• Insurable risks

• Subrogation

What types of risks will an insurance company only insure?

• Insurable risks

• Uninsurable risks

• Low-risk

• High-risk

What helps to reduce the risk of running a business?

• Insurance

• Subrogation

• Indemnity

• Pooling of risk