Business Services · Class 11 · CBSE · Commerce Business Studies
A business takes an insurance policy for its stock against fire. Which fundamental principle of insurance is violated if the business insures the sam…
Practice question from Business Services (Class 11 · CBSE · Commerce Business Studies), with the correct answer and a step-by-step solution.
medium · MCQ · Q-D9FFB7
A business takes an insurance policy for its stock against fire. Which fundamental principle of insurance is violated if the business insures the same stock with two different insurers for more than its actual value with the intention of making a profit?
- A.Principle of Insurable Interest
- B.Principle of IndemnityCorrect answer
- C.Principle of Subrogation
- D.Principle of Mitigation
Solution
The Principle of Indemnity states that insurance is meant only to compensate for actual loss, not to make a profit. Insuring for more than value violates this core idea.
More from Business Services
- Which characteristic of services implies that they cannot be stored for future use or separated from the service provider?
- Which type of bank account is most suitable for business firms that make and receive large numbers of transactions daily, as it offers no r…
- Which of the following services is NOT included under the broad category of business services?
- 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…
Practise more Business Studies
Sign up free for adaptive practice on this chapter, with instant feedback and hints on every question.
Start practising freeFree to start · No credit card needed