A company insures its stock against fire for rs.15 lakh.A fire broke down and the total stock was lost. at the time of fire there was stock worth rs.25 lakh. what is the value of compensation company would be entitled to?
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25*10/15.....is the compensation
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The compensation that the company will be entitled to is 15 Lakhs.
- The fire insurance contract is a purely a contract of compensatory indemnity.
- In the event of a loss, the insured shall recover the true amount of the loss of the insurer, which is equal to the maximum amount insured in respect of the subject matter.
- Thus, though the stock was of 25 Lakhs, but the insured stock was of 15 Lakhs, the company will receive Rs. 15 lakh.
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