Question

Which of the following are the characterics of insurance?

Options

• It is a contract of indemnity.

• It covers the risk of uncertain event in future.

• It is based on the principle of cooperation whereby one person's loss is shared by many persons.

• All of these

Answer 1

All of these

Explanation:

1. Insurance is a contract between two parties.
2. One party (insured) agrees to pay a premium in a lump sum or in instalments at periodical intervals.
3. The other party (the insurer) undertakes to compensate the insured against losses up to the specified limit.
4. It is a contract of indemnity.
5. It covers the risk of an uncertain event in the future
6. It is based on the principle of 'cooperation' whereby one person's loss is shared by many persons.