question_answer

Sanjana obtained a life insurance policy of her husband. After 5 years, her husband dies of cancer. At the time of policy also Sanjana and her husband were aware of the disease but they did not disclose it to the insurance company.

(a) Can she claim the amount of policy from the insurance company?

(b) Identify the principle of insurance involved.

(c) Explain two more principles of insurance.

Answer:

Ans.     (a) No, he cannot claim the compensation.

(b) Principle of utmost good faith is not followed. According to this principle, it is the duty of the insurer and insured to voluntarily make full accurate disclosure of all facts, material to the insurance contract.

(c) Principle of indemnity: Indemnity means security or compensation against loss or damage. The principle of indemnity is such principle of insurance stating that an insured may not be compensated by the insurance company in an amount exceeding the insured's economic loss.

In type of insurance the insured would be compensation with the amount equivalent to the actual loss and not the amount exceeding the loss.

This is a regulatory principal. This principle is observed more strictly in property insurance than in life insurance.

The purpose of this principle is to set back the insured to the same financial position that existed before the loss or damage occurred.

Principal of subrogation: The principle of subrogation enables the insured to claim the amount from the third party responsible for the loss. It allows the insurer to pursue legal methods to recover the amount of loss, For example, if you get injured in a road accident, due to reckless driving of a third party, the insurance company will compensate your loss and will also sue the third party to recover the money paid as claim.