Multiple choice

An insured cannot recover more than his actual loss because of

  1. under-insurance

  2. excess clause

  3. principle of indemnity

  4. franchise clause
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Indemnity means security or compensation against loss or damage. The principle of indemnity states that the insurance company may not compensate the insured with an amount exceeding the insured’s economic loss. The insured would be compensated with the amount equivalent to the actual loss and not the amount exceeding the loss.

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