Business Studies

The insured can, in the event of loss, recover the actual amount of loss from the insurer. Which of the following elements of fire insurance makes it happen?


Answer & Solution

Indemnity


SOLUTION
The principle of indemnity states that under an insurance contract the insurer undertakes to put the insured in the same position that he occupied immediately before the mishap. 

The insurance company undertakes to compensate the insured for the loss caused to him due to damage of the property insured. 

For this purpose, the compensation payable and the loss suffered need to be measured in terms of money.  All insurance contracts of fire or marine insurance are contracts of indemnity. 
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Single Correct Medium Published on 18th 08, 2020
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