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WAEC Commerce 2000 Question 30

Question 30

Insurance

A house worth N50,000 was insured against fire for N30,000. Fire destroyed and caused damages worth N20,000 on the house. Under which insurance principle will the owner be entitled to a compensation of N20,000?

  1. A.Contribution
  2. B.Subrogation
  3. C.Indemnity
  4. D.Uberrimae fidei
Show the answer and explanation

Answer: C (Indemnity)

Explanation

Indemnity puts the insured back where he was before the loss, so he is paid the actual loss of N20,000.