Question

A person gets his stock insured worth 50,00 for 70,000. A fire occurs and whole stock gets damaged. Insurance company will pay him only 50,000, i.e., the actual value of his stock and not 70,000. On the other hand, if any person gets his stock insured worth 50,000 for 30,000 and the whole stock gets damaged, he will get only 30,000, the actual value for which insurance has been taken. Mention the principle of insurance to which the above example relates.

1 point

Proximate cause

Indemnity

subrogation

Mitigation

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Answer 1

Answer:

indemnity is the correct answer

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Answer 2

Concept Introduction:-

According to the principle of indemnification, any time that the loss arises, the individual who experienced it must be returned similar financial situation he or she was in just before the loss.

Explanation:-

We have been provided a question

We need to choose from the given alternatives the correct option

The correct option is Indemnity.

It is because the principle of indemnity governs that an insurance contract compensates you for any damage, loss or injury caused only to the extent of the loss incurred. Insurance contract ensures that the insurer does not make a profit in the event of an incurred loss.

Final Answer:-

The correct answer is option Indemnity.

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