Question

What does the principle of "Contribution" imply in insurance?

a.

Each insurer must contribute the same amount to the loss

b.

The insured is responsible for the full loss amount

c.

Compensation paid by all insurers cannot exceed the actual loss

d.

The insured must contribute a portion of the premium

Answer: (c).Compensation paid by all insurers cannot exceed the actual loss Explanation:The principle of contribution implies that if the same property is insured with more than one insurance company, the compensation paid by all the insurers together cannot exceed the actual loss suffered.

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Q. What does the principle of "Contribution" imply in insurance?

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