Question

Sarthak has taken a fire insurance policy for the warehouse. Due to fire, he

suffered a loss of Rs. 500000 and gets compensation claim from the insurance

company. The damaged stock can be sold for Rs.15000. Who has the right over

this amount? State the relevant insurance principle in this regard.​

Answer 1

Answer:

The insurance company has the right over the amount realised by selling the half burnt goods after it has paid compensation for the less to the insured. Sukram cannot make any profit by selling the half burnt goods. (Principle of subrogation

Answer 2

Answer:

The principle of Subrogation is the relevant insurance principle in this regard.​

Explanation:

According to the principle of subrogation:

• insurance is not a contract of profit.
• the insured will be paid only that amount of which he/she has suffered the loss.
• In this principle insured is not allowed to make any profit from the loss or damage that occurred.
• the individual has been compensated for the damage but the ownership or rights get transferred to the insurance company.

The damaged stock can be sold for Rs.15000 Insurance company have full access or right to the damaged stock.

Thus,

1. principle of Subrogation is used in this paragraph
2. The insurance company will have the full right over the damaged stock.

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