The sub principle of contribution, supported by the principle of indemnity is used to prevent the insured from collecting twice, once from the insured and the other from the negligent party.

INSURANCE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

The ‘sub’ principle of contribution, supported by the principle of indemnity is used to prevent the insured from collecting twice, once from the insured and the other from the negligent party.

A	True
B	False
C	Either A or B
D	None of the above

Explanation:

Detailed explanation-1: -Contribution principle applies when the insured takes more than one insurance policy for the same subject matter. It states the same thing as in the principle of indemnity, i.e. the insured cannot make a profit by claiming the loss of one subject matter from different policies or companies.

Detailed explanation-2: -Functions of Principle of Indemnity a) The objective of the insurer is to put you back in the same financial condition which you were in before the loss. b) You are compensated after the insurer fully inspects and calculated the loss. The claim you receive is neither less nor more than the loss.

Detailed explanation-3: -Therefore, the insured is protected from losses by the principle of indemnity, but through stipulations that keep him or her from being able to scam and make a profit.

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