Anurag took a fire insurance policy for his property worth Rs. 60,000 with two insurers-ICICI Lombard General Insurance Co. Ltd for Rs. 4,00,000 and Bajaj Allianz General Insurance... Anurag took a fire insurance policy for his property worth Rs. 60,000 with two insurers-ICICI Lombard General Insurance Co. Ltd for Rs. 4,00,000 and Bajaj Allianz General Insurance Co. Ltd for Rs. 2,00,000. An electric short circuit in his property caused fire and it resulted in a loss of Rs. 1,50,000. He filed a claim for Rs. 1,50,000 against each of two insurance companies. a) Can Anurag recover Rs. 1,50,000 each from the two insurers? b) Which principle of insurance has been highlighted in the given case? c) Determine the liability of each of the two insures.
Understand the Problem
The problem presents a scenario involving a fire insurance policy taken by Anurag with two different insurance companies. A fire incident resulted in a loss, and Anurag filed claims with both insurers. We need to determine if Anurag can recover the full claim amount from each insurer, identify the relevant insurance principle, and calculate the liability of each insurer.
Answer
a) No. b) Principle of Contribution. c) ICICI Lombard: Rs. 1,00,000, Bajaj Allianz: Rs. 50,000.
a) Anurag cannot recover Rs. 1,50,000 from each insurer due to the principle of indemnity. b) The principle of insurance highlighted is the principle of contribution. c) ICICI Lombard's liability is Rs. 1,00,000 and Bajaj Allianz's liability is Rs. 50,000.
Answer for screen readers
a) Anurag cannot recover Rs. 1,50,000 from each insurer due to the principle of indemnity. b) The principle of insurance highlighted is the principle of contribution. c) ICICI Lombard's liability is Rs. 1,00,000 and Bajaj Allianz's liability is Rs. 50,000.
More Information
The principle of contribution states that when multiple insurers cover the same risk, they contribute proportionally to cover the loss. The liability of each insurer is determined by the proportion of the total coverage they provide. Here, ICICI Lombard covers 400,000 out of a total coverage of 600,000 (400,000 + 200,000), and Bajaj Allianz covers the remaining 200,000.
Tips
A common mistake is assuming each insurer is liable for the full claim amount up to their policy limit, without considering the principle of contribution.
Sources
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