Multiple choice

Which of the following statements is incorrect about the principles of insurance?

  1. A contract of insurance is a contract of uberrimae fidei.

  2. The pecuniary interest of the insured in the subject matter is insured.

  3. The principle of mitigation states that it is the duty of the insured to take reasonable steps to minimise the loss or damage to the insured property.

  4. The right of ownership of insured property passes on to the insurer under the principle of subrogation.

  5. The principle of indemnity is only applicable to life insurance.

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E Correct answer
Explanation

This is incorrect. The principle of indemnity is not applicable to life insurance. According to the principle of indemnity, the insurer undertakes to put the insured, in the event of loss, in the same position that he occupied immediately before the happening of the event insured against.

 
 

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