Question

The principle of indemnity applies to life insurance. (State with reason whether the given statement is true or false)

Answer 1

Indemnity means security or compensation against loss or damage.The principle of indemnity is suchprinciple of insurance stating that aninsured may not be compensated by the insurance company in an amount exceeding the insured's economic loss.

Answer 2

The given reason is False.

The principle of indemnity states that the insurer is liable to pay the damages equivalent to the actual amount of monetary loss only.

This limits the claim boundations of the insured.

In case of a life insurance contract, the value of life cannot be measured in quantifiable terms.

Thus the principle loses its validity in case of a life insurance contract.