Multiple choice

In special contracts, with respect to a contract of indemnity,

  1. the party to be indemnified shall never be called upon to pay

  2. all insurance contracts are contracts of indemnity

  3. the promise of indemnity may be express or implied

  4. None of these
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B Correct answer
Explanation

(2) Fire and marine insurance contract, in general, are contracts of indemnity, that is, they provide for compensating the insured for loss or damage sustained. A contract of life insurance forms an exception to the general rule. A life insurance contract does not resemble a contract of indemnity because the insurer does not undertake to indemnify the assured for any loss on maturity or death of the assured but promises to pay sum assured in that event.

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