Question

Mr. Akshit gets his factory insured against fire of Rs. 40 lakhs with insurer A and 10 lakh with insurer B. A loss of Rs. 5 lakh occurred. (a) How much compensation can be claimed from A and B separately and why? (b) Name the principle of insurance highlighted in the above case. (c) The residues of the factory were sold for Rs. 15,000. Who will rightly avail the amount and why​

Answer 1

Answer:

insurance is a contract represented by a policy in which the policyholder receives financial protection or compensation against losses from the insurance company. The company pools client risks to make payments more affordable for policyholders.

Insurance contracts serve to insure against the risk of financial losses, large and small, that may arise as a result of damage to the insured or his property, or from liability for damage or injury caused to a third party.

Explanation:

(a) According to the principle of contribution, if a person has double insurance, the insurers are to share the losses in proportion to the amount insured by each of them. Therefore an amount of 4 lakhs and 1 lakh can be claimed from A and B respectively.

(b) Contribution principal

The contribution principle says that if a loss occurs and you have multiple policies, the loss will be covered by the policies based on the ratio of coverage that the policy provides.

If you have made a full claim with one company, you cannot apply to other companies. In such a case, since one insurance company has paid the entire compensation, it has the right to demand proportional compensation from the other insurance companies.

(C) The insurer will legitimately use the amount according to the principle of Subrogation. This says that after the settlement of the insured event, the insurer has the right to stand in the place of the insured. After the insured in compensation for loss/damage to the property insured by him, the ownership right to this property passes to the insurer.

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