Basic principles of insurance - SS2 Commerce Past Questions and Answers - page 1
What is the principle that requires both the insurer and the insured to act honestly and disclose all relevant information?
Utmost good faith
Insurable interest
Subrogation
Which principle states that the insured must have a financial or legal interest in the subject matter of the insurance policy?
Utmost good faith
Insurable interest
Subrogation
What does the principle of indemnity aim to achieve?
Making a profit from insurance
Restoring the insured to the same financial position
Preventing double compensation
What does subrogation allow the insurance company to do?
Compensate the insured for a loss
Pursue legal rights against responsible parties
Assess the insurable interest of the insured
Which principle prevents insurance from being used as a means of speculation or gambling?
Utmost good faith
Insurable interest
Indemnity
Define the principle of utmost good faith.
The principle of utmost good faith requires both the insurer and the insured to act honestly and disclose all relevant information to each other.
What is the purpose of subrogation in insurance?
The purpose of subrogation is to allow the insurance company, after compensating the insured for a covered loss, to pursue legal rights or remedies against a third party responsible for the loss