CBSE Class 11th Business Studies Worksheets - w4a

Free Business Studies - Class 11th (CBSE) - Worksheet - w4a - Business Service

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Our expert teachers have built this structured CBSE Business Studies worksheet to cover the following:

• Principle of Indemnity
• Principle of Subrogation
• Principle of Utmost Good Faith
• Principle of Mitigation
• Principle of Contribution
• Principle of Insurable Interest
• Principle of Proxima Cause

Let's solve them and increase our knowledge level.

Topic : Principles of Insurance

Q1. 

• Assertion (A): According to the principle of subrogation, the insured should not be allowed to make any profit by selling damaged property or in the case of lost property being recovered.
• Reason(R): The Principle of Subrogation is a corollary to the Principle of Indemnity, and the damaged goods will belong to the insurance company once the compensation is paid. It also states that insurance is not a contract for making a profit.

Based on the above Assertion and Reason, choose the correct answer from the options given below.

1. Both Assertion and Reason are correct, and the Reason is a correct explanation of the Assertion.
2. Both Assertion and Reason are correct, but Reason is not a correct explanation of the Assertion.
3. The Assertion is correct, but the Reason is incorrect.
4. Both the Assertion and the Reason are incorrect.

Q2. Priyanshi is running a departmental store. The store was insured against natural disasters like flood, earthquake, and fire from Hindustan General Insurance Company for Rs 50 lacs. Heavy rain in the city caused a massive flood. This left the store without any security. The store was looted by people, which was caught on CCTV. She claimed from the insurance company the amount of damage of 13 lacs for the material and furniture spoiled from the flood, and also Rs 5 lacs for the loss of material by theft. She also claimed another Rs 25 lacs for now, converting the store into a fully AC store with an additional floor for more storage space. Insurance, after assessing the damage to the property and stock due to flood and seeing the CCTV footage, accepted the claim of Rs 13 lacs. She argued that as she has been paying a premium of Rs 50 lacs, she should be paid the full claim of Rs 43 lacs. What is the fundamental principle of insurance? (3 marks)

Q3. Chatan gets his oil-godown doubly insured against fire for Rs 5,00,000 with insurer 'Easy General Insurance' and for Rs 15,00,000 with insurer 'Risk Free Insurance Ltd'. Due to a short circuit, an unforeseen loss by fire of oil stock worth Rs 6 Lakh occurred on 11th September. How much compensation can be claimed from each of the insurers? Explain in detail. (3 Marks)

Q4. Mr. Rajiv took an Insurance Policy against his car, and after three months, he sold it to Mr. Kamal. The car was stolen from outside Mr. Kamal's house. Mr. Rajiv claimed the Insurance company, but the claim was rejected on the grounds that Mr. Rajiv was no longer the owner of the car. Which principle of insurance is violated, and explain? (3 Marks)

Q5. A company insures its stock against fire for Rs. 15 Lakh. A fire broke out and the total stock was lost. At the time of the fire, there was stock worth Rs. 25 Lakh. What is the value of compensation that the company would be entitled to? Justify your answer. (3 Marks)

Q6. Naresh took a fire insurance policy from NICL of Rupees 50 Lakh for his factory at an annual premium of Rupees 75,000. To avoid paying more than his amount, he did not disclose that highly explosive chemicals were being manufactured in his factory. Due to a fire, his factory gets damaged. The insurance company NICL refused to make the payment for the claim as it became aware of the highly explosive chemicals. Is Naresh entitled to claim? (3 Marks)

Q7. Without disclosing that he is suffering from TB, Mr. A gets himself insured against death for rupees 10 lakhs. He lives for another three to four years and dies due to TB. The insurance company came to know about Mr. A’s illness only after his death. Now, under these circumstances, the insurance company is not liable to pay anything to the dependents of Mr. A, as the contract between the insurance company and Mr. A is void. Identify the principle of insurance to which the above example relates and explain it. (3 Marks)

Q8. If any person gets his property insured by three insurance companies, then at the time of the occurrence of a loss, all three companies will compensate for the loss faced, but in a proportionate manner. Not every company will pay the full compensation individually. Moreover, the total amount paid by the insurance company will not, under any circumstances, exceed the actual loss incurred. Name the principle of insurance to which the above statement is related. Explain it. (3 Marks)

Q9. A plant manager gets his stock of goods insured, but he hides the fact that the electricity board has issued him a statutory warning letter to get his factory wiring changed. Later, the factory catches fire due to a short circuit. Which principle is violated in the case? Elaborate. (3 Marks)

Q10. Ankit's warehouse was covered by a Fire Insurance Policy of ₹ 10,00,000. Two years back, his warehouse caught fire. Ankit immediately called up the nearest fire station and started removing the goods from the warehouse to save them from fire. He took all reasonable steps to minimise the loss or damage. As a result, the actual loss by fire to him was ₹ 3,00,000, which could have gone up to ₹ 7,00,000 if he had not acted as a prudent person. After scrutiny of the loss, the insurance company handed over the cheque of ₹ 3,00,000 to Ankit. Identify and state the principle of insurance that Ankit followed in the given. (3 Marks)

The End

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