Jatin got insured his bungalow against fire for ` 20,00,000. A portion of it was burnt due to fire. It was estimated that an expenditure of ` 15,00,000 would restore the bungalow to its original condition. Jatin made a claim of ` 20,00,000 stating that he was paying premium for the insurance of ` 20,00,000. The insurance company rejected his claim and paid only ` 15,00,000. Name and explain the principle of insurance on which the company’s decision is based.
Answers
A1. Income Method GNPFC = Compensation of employees + Rent + Interest + Undistributed Profits + Dividend + Net
Factor Income from Abroad + Consumption of fixed capital = 1850 + (400 +500 +900 + 200) + (-) 50+ 100 = 3900
CRORE Note: o GNPFC = NNPFC + Consumption of fixed capital o NNPFC = Compensation of employees + Rent +
Interest + Undistributed Profits + Dividend + Net Factor Income from Abroad o Compensation of employees is
income from work which includes wages and salaries in kind and cash, and contribution to social securities
ii. Expenditure Method GNPFC = GNPMP - Net Indirect Taxes Private Final consumption Expenditure + (Net
Domestic capital formation + consumption of fixed capital) + Govt. Final consumption Expenditure + Net Exports +
Net Factor Income from Abroad - Net Indirect Taxes = 1100 +2600 + (500 +100) + (-) 100 + (-)50 – 250 = 3900
CRORE