where a number of insurance companies are liable under one policy, the principle applicable is...
COMMERCE
WAEC 2016
where a number of insurance companies are liable under one policy, the principle applicable is ?
- A. subrogation
- B. contribution
- C. indemnity
- D. utmost good faith
Correct Answer: B. contribution
Explanation
The contribution principle in insurance is a rule that specifies what happens when a person buys insurance from multiple companies to cover the same event, and that event occurs. The contribution principle of insurance states that if a risk is insured by multiple carriers, and one carrier has paid out a claim, that carrier is entitled to collect proportionate coverage from other carriers.
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