Business Services-1 — OCM STD 11 Commerce — Question
Gujarat BoardEnglish MediumSTD 11 CommerceOCMBusiness Services-13 Marks
Question
Explain principle of Indemnity .
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Answer
Principle of Indemnity : the basic objective of insurance contract is to pay compensation to the insured against loss.
How much compensation to be paid is determined by this principle , Insurance bears properties is not take to make profit.
Compensation is not paid more than loss.
If the insurance taken of the asset is of $D$ $6$ lakh and the worth of asset is $D$ $10$ lacs and entire asset is destroyed then insure gets $D$ $6$ lacs as compensation .
If the value of asset is $D$ $10$ lacs , insurance taken is of $DD$ $6$ lacs and damage to the asset is $D$ $4$ lacs then proportionate amount compensation of insurance amount $D$ $2,40,000$ will be paid.
If the value of property is $D$ $10$ lacs and insurance taken is of $D$ $10$ lacs and damage to the property is $D$ $10$ lacs then entire amount $D$ $10$ lacs will be paid by insurance company .
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