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Questions
Explain 'contribution' as a principle of insurance.
Write a short note on principle of contribution.
Solution
- Contribution means the right of an insurer who has paid a claim under an insurance policy to call upon other insurers to contribute to the payment.
- When an insured has taken more than one policy on the same property, he shall not be entitled to claim from each insurer more than the total loss from all insurers put together.
- The principle of contribution is applicable when the following conditions are satisfied:
- The insured must be the same person.
- All the policies must cover the same risk.
- All the policies must be in force at the time of the loss.
- The total amount of compensation under all policies must not exceed the amount of the loss.
Notes
Students should refer to the answer according to their questions.
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