Page 126 - Liability Insurance IC74

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(g) Ratio of AOA: AOY = 1:2, premium charged is 80%
of the following:
Limit AOY exceeding 200 lacs - Rate/premium Rs

35025+
But not exceeding 250 lacs - 1.25% on the

amount excess of
Rs 200 lacs

Calculate the premium based on above information for
Products Liability Policy including exports.

Q5. Explain in detail how the Principle of Indemnity is
strictly observed in Liability Insurances.

Ans. The principle of Indemnity provides that an insured can
recover his financial loss only to the extent of his
insurable interest. The object of this principle is to ensure
that the Insured's loss is made good in such a way that
financially the insured is neither better off nor worse
off as the result of loss.

In effect, the insured is prevented from making a profit
or deriving any undue benefit out of a loss. The principle
of Indemnity is strictly observed in liability insurances.
These insurances are designed to provide the insured
protection against financial consequences of legal liability.

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