Commerce WAEC

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: Option B

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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