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JAMB Commerce 2005 Question 9

Question 9

Insurance

The compensation the insured gets depends heavily on the

  1. A.economic situation
  2. B.premium paid
  3. C.risk suffered
  4. D.insurer's buoyancy
Show the answer and explanation

Answer: C (risk suffered)

Explanation

Insurance puts the insured back where he was before the loss (indemnity). So what he receives depends on the loss he actually suffered, not on how much premium he paid.