Question

Ritesh insured his factory for rupees 500000 against fire. Due to fire in

his factory, he suffered a loss of stock worth rupees 300000. He is of the

opinion that can recover the entire policy amount of rupees 5 lakh from the

insurance company? Do you think Ritesh is right? State the relevant

insurance principle in this regard.​

Answer 1

Answer:

Principle of Indemnity

Explanation:

No, Ritesh is wrong

The insurance contracts are contracts of Uberrima fides so one should not cheat other.

Principle of Indemnity states that insurance is security only against risk of loss . And insured party should not collect more that the actual loss in event of damage.

So he should only claim 300000

* Principle of indemnity is only applicable to fire and marine insurance contracts not to life insurance contracts