Specific Aspects Of Insurance

Question 1

What is Contribution

Answer 1

It only applies to indemnity insurance.

It is also known as double insurance.

This happens when the insured has covered the risk with more than one insurer against the happening of the same, uncertain future event.

The insurer’s contributes pro rata to the idemnification of the insured (e.i) The insurers pay their share of the loss to the insured based on the proportion of the total coverage they provide

Question 2

Under- insurance and over- insurance

Answer 2

Under- insurance is defined as where the sum insured, which is the maximum limit of the insurer’s liability, is less than the total value of the insured’s interest in the object of risk at the time of loss or damage