Basic Principles of Insurance

Which type of insurance policy is exempt from the principle of indemnity, allowing the full sum assured to be paid upon the occurrence of the event?

Chief Ojo secured a ₦50,000,000 life assurance policy with Insurer X and another ₦50,000,000 life assurance policy with Insurer Y. At the same time, he insured his luxury yacht, valued at ₦50,000,000, for fire damage with Insurer X for ₦50,000,000 and with Insurer Y for ₦50,000,000. Following an accidental fire that caused the total destruction of the yacht and resulted in Chief Ojo's death, his estate submitted claims for both policy types to both insurers. Which of the following correctly describes the legal entitlement of Chief Ojo's estate under insurance principles?

Match each basic principle of insurance on the left with its correct legal definition or application on the right.

A logistics company's delivery truck was damaged in a road accident caused entirely by a reckless third-party driver. The insurance company fully indemnified the logistics company for the repair costs of $1,200,000$ Naira and subsequently sued the reckless driver to recover the money paid. Which principle of insurance entitles the insurer to take legal action against the third party in place of the insured?

Under the legal principle of proximate cause in insurance, an insurer is liable for loss or damage if the direct, dominant, and efficient cause that set the chain of events in motion is an insured peril, even if an intermediate event in the sequence was not specifically named in the policy.

Match each basic principle of insurance listed on the left with its corresponding legal application or description on the right.

A merchant insured a commercial building against fire for ₦20,000,000. During the proposal stage, the merchant knowingly concealed the fact that inflammable chemical solvents were stored on the premises. Three months later, an accidental electrical fault destroyed the building. Which basic principle of insurance allows the insurer to legally reject the compensation claim?

Under the principle of contribution, a property owner who holds separate indemnity fire insurance policies with two different insurance companies for the same commercial warehouse is entitled to collect the full value of compensation from both insurers in the event of a total loss.

Mr. Adebayo insured his life for ₦10,000,000. Upon his passing, the insurance company paid the full sum of ₦10,000,000 to his named beneficiary without attempting to assess the monetary value of his loss. Why does the principle of indemnity fail to apply to life assurance contracts?

Under the principles of commercial insurance, a property owner who takes out a fire insurance policy on a commercial building must possess an insurable interest in the property both at the time the policy is issued and at the time the loss occurs.

A logistics firm's delivery van valued at ₦12,000,000 was damaged in a road collision caused by a third party's negligence, resulting in ₦4,000,000 worth of structural damage. The insurance company fully indemnified the logistics firm for the ₦4,000,000 loss. When the logistics firm subsequently attempted to sue the negligent third party to recover another ₦4,000,000 for the exact same damage, the court dismissed the firm's suit. Which basic principle of insurance legally empowers the insurer to step into the shoes of the insured and assume their rights of recovery against negligent third parties?

Chief Emeka attempts to take out a fire insurance policy on his neighbor's commercial warehouse, despite having no financial stake or legal connection to the property. The insurance company refuses to issue the policy on the grounds that he does not stand to suffer any direct financial loss if the building is destroyed. Which basic principle of insurance is Chief Emeka failing to satisfy?

The principle of indemnity allows an insured person to profit financially from an insurance claim by recovering an amount greater than the actual financial loss suffered.

A merchant insured his commercial warehouse against fire outbreak. During an electrical storm, lightning directly struck an adjacent tree which fell on the warehouse roof, severing live electrical wires and triggering a fire that consumed the stored goods. In determining whether the insurer is legally liable to compensate the merchant, which principle of insurance is primarily applied to determine the direct and dominant cause of the loss?