Business Services · Class 11 · CBSE · Commerce Business Studies
Mr. Sharma insured his house against fire for Rs 5,00,000. A fire broke out, causing a damage worth Rs 2,00,000. How much compensation can Mr. Sharma…
Practice question from Business Services (Class 11 · CBSE · Commerce Business Studies), with the correct answer and a step-by-step solution.
medium · MCQ · Q-42FCDD
Mr. Sharma insured his house against fire for Rs 5,00,000. A fire broke out, causing a damage worth Rs 2,00,000. How much compensation can Mr. Sharma claim from the insurance company?
- A.Rs 5,00,000
- B.Rs 2,00,000Correct answer
- C.Rs 3,50,000
- D.Nothing, as insurance does not cover property damage
Solution
Under the Principle of Indemnity, the insured is compensated only for the actual loss suffered, up to the maximum amount of the policy value.
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