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Question
Distinguish between Principle of Indemnity and the Principle of Insurable Interest.
Solution
| Principle of Indemnity | Principle of Insurable Interest |
| Indemnity means a promise to compensate in case of a loss. Except for life insurance, it refers to the guarantee of compensation in the event of a loss. The insured will only be reimbursed for the amount of loss suffered by him. The insured party cannot profit from this insurance deal. | Insurance contracts require a monetary interest from the insured to be legally binding. Insurable interest refers to a person's loss resulting from the destruction of insured property. |
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Choose the Correct Answer.
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______ means a promise to compensate in case of loss.
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Uberimmae fidae, the principle of insurance means ______.
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Explain 'contribution' as a principle of insurance.
Is insurable interest necessary in all insurance contracts?
