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in Business Studies Form 2 by
State and explain five principles of insurance

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  1. Utmost good faith
    • The person taking out insurance cover to disclose all relevant information/ facts relating to the property or person insured.
  2. Proximate cause
    • For the insured to be compensated there must be a very close relationship between the loss suffered and risk insured against
  3. Contribution
    • If the insured has taken policies with more than one insurance company covering the same risk, in the event of loss the insurers contribute proportionately to indemnify the insured.
  4. Indemnity
    • The insured would be compensated in such a way that he/she is put back to the financial position he/she was just before the risk insured took place
  5. Subrogation
    • Whatever remains after the insured has been compensated becomes the property of the insurer.
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Insurance interest, Indemnity, Utmost of good faith, Subrogation, Proximate cause
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