Question

Mansi is runnng a general store. The store was insured against natural disasters like flood, earthquake and fire from Hindustan General Insurance Company for the amount of Rs 50 lacs. Heavy raining in the city caused massive flood. This left the store without any security. The Store was looted by people which was caught on CCTV . She claimed from the insurance company the amount of damage of 13 lacs for the material and furniture spoiled from flood and also Rs 5 lacs for the loss of material by theft, she also claimed another Rs 25 lacs for now converting the store into fully AC and additional floor for more storage space. Insurance after assessing the damage to the property and stock dur to flood and seeing the CCTV footage accepted the claim of Rs 13 lacs. Mansi argued that as she has being paying premium for Rs 50 lacs she should be paid the full claim of Rs 43 lacs. 1. What is the fundamental principle of insurance? 2. Identify the value which motivates him/her to take an insurance? 3. Identify and explain the principles of insurance involved by insurance company by accepting the claim amount​

Answer 1

Answer:There are seven basic principles that create an insurance contract between the insured and the insurer:

Utmost Good Faith.

Insurable Interest.

Proximate Cause.

Indemnity.

Subrogation.

Contribution.

Loss Minimization.

2. Mansi is motivated because of the fact that the assets she poses is not secured so saving money in form of insurance is beneficial at time of loss of assets.

3. Contribution: it is the right of an insurer who has paid claim under an insurance,to call upon other liable insurer to contribute for the loss of payment.

Explanation: