You visited us 0 times! Enjoying our articles? Unlock Full Access!
Question
A Conditional Contract B Unilateral Contract C Indemnity Contract D None of these
Open in App
Solution
Verified by Toppr
Correct option is C. Indemnity Contract
According to this principle, insurance is not a contract of making a profit. The purpose of insurance is to bring back the insured in the same financial position as he was before the loss. For example:- A person insured his factory for Rs 2 lakh against fire. Due to fire he suffered a loss of Rs 1 lakh, then the insurance company will compensate him Rs 1 lakh only and not the policy amount that is Rs 2 lakh because the purpose of insurance is to compensate for loss and not for earning profit. The principle of indemnity is not applicable on life insurance policy because one cannot estimate the loss due to the death of a person.
Was this answer helpful?
