question_answer

A person gets his house insured, but he hides the fact that he stores petrol in his house. His house catches fire. He does not bother to minimize the loss as he felt that his house is insured so it is not his headache to make an effort to minimize the loss.

(a) Can he claim compensation?

(b) State the name of principles involved.

(c) Explain these principles.

Answer:

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

(b) Principle of utmost good faith

(c) 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.

Principle of mitigation: If refers that the insured should try to minimize the loss of the subject matter of the insurer even if it is insured.