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Question

What is the principle of contribution in insurance? 

A If a person has more than one insurance policy covering the same risk, then each insurer will contribute towards the loss in proportion to the sum insured Correct Answer Incorrect Answer
B The insurer who pays for the loss should have the right to take over the insured's rights against third parties that caused the loss Correct Answer Incorrect Answer
C Only the loss caused by the peril covered in the insurance policy will be compensated Correct Answer Incorrect Answer
D The insured must take reasonable steps to minimize the loss after the occurrence of the insured event Correct Answer Incorrect Answer

Solution

The principle of contribution requires that if a person has more than one insurance policy covering the same risk, then each insurer will contribute towards the loss in proportion to the sum insured.

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