PART I. WRITE TRUE IF THE STATEMENT IS CORRECT AND WRITE FALSE IFIT IS INCORRECT (2 pt. each) 1. An insurable interest may be applied on life.property, or potential liability. 2. A persen has not an interest in the sums he may be called upon to pay to third parties as a result of accident. 3. The principle of indemnity states that a person may collect more than the actual loss in the event of damage caused by an insured peril. 4. Only contracts in property and liability insurance are subject to principle of indemnity. 5. Subrogation papplied only to policies which are contricts of indemnity.

Question

PART I. WRITE TRUE IF THE STATEMENT IS CORRECT AND WRITE FALSE IFIT IS INCORRECT (2 pt. each) 1. An insurable interest may be applied on life.property, or potential liability. 2. A persen has not an interest in the sums he may be called upon to pay to third parties as a result of accident. 3. The principle of indemnity states that a person may collect more than the actual loss in the event of damage caused by an insured peril. 4. Only contracts in property and liability insurance are subject to principle of indemnity. 5. Subrogation papplied only to policies which are contricts of indemnity.

Answer 1

1. **TRUE**. Insurable interest can exist in life (e.g., your own life, the life of a family member, or a key employee), property (e.g., a house, car, or business equipment), and potential liability (e.g., the risk of being sued for negligence).2. **FALSE**. A person *does* have an insurable interest in the sums they may be called upon to pay to third parties due to an accident. This is the basis of liability insurance.3. **FALSE**. The principle of indemnity states that the insured should not profit from a loss but should be restored to the same financial position as before the loss. They should not collect *more* than the actual loss.4. **TRUE**. Life insurance and other similar contracts are not contracts of indemnity. They pay a stated sum upon the occurrence of the insured event (e.g., death) regardless of the actual financial loss.5. **TRUE**. Subrogation, the right of an insurer to pursue a third party that caused an insurance loss to the insured, only applies when the insurance policy is a contract of indemnity. This prevents the insured from collecting twice for the same loss (once from the insurer and again from the at-fault party).

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