Question

Mr. A insures his house worth Rs. 10 crores with two insurers HDFC for Rs. 7.50 crores and Bajaj Allianz for Rs. 7.50 crores. The actual loss of house destroyed is Rs. 7 crores. Now, Mr. A can claim full loss of Rs. 7 crores either from HDFC or Bajaj Allianz or proportionately Rs. 3.5 crores from each of them. Which principle of insurance is applicable in this situation?

• A. Principle of Causa Proxima
• B. Principle of Contribution
• C. Principle of Subrogation
• D. Principle of Uberrimae Fidei

Hint:

Principle of Contribution prevents the insured from claiming more than the actual loss.

Answer 1

The Correct Option is B

When a loss is insured by multiple insurers, the claim is shared proportionately. This is the Principle of Contribution.