Question

Part I. Choose true or false? Explain why?
1. In non-life insurance, insurable interest must exist when risks occur. True or False?
Explain and give an example?
2. Third party liability insurance belongs to non-life insurance. True or False? Explain
and give an example?
3. Subrogation will be applying if insured losses are caused by the third party? True or
False? Explain and give an example?
4. Principle of ulmost good faith only applies to the insured. True or False? Explain
and give an example?
5. In third party liability insurance, third party can be the insured or the members of
their family. True or False? Explain and give an example?

Answer 1

1) TRUE

non-life insurance is any type of insurance other than life insurance. While life insurance is broken down into permanent and term life policies, non-life insurance includes many types of other insurance policies. Non-life insurance may cover people, property or legal liabilities.

Examples of Non-Life Insurance

Some common examples of non-life insurance include:

• Auto insurance
• Property insurance
• Health insurance
• Accident insurance
• Travel insurance
• Disaster insurance (fire, flood, earthquake, etc.)
• Credit insurance
• Mortgage insurance

2) TRUE

Third party insurance means when you take out an insurance policy, you’re forming a legal relationship with your insurance provider. In this relationship, you’re the ‘first party’ and the insurer is the ‘second party’. The ‘third party’ is someone who doesn’t have any involvement with creating this contract, but could be affected by it. This is usually a member of the public who can make a claim against you – which is where third party liability insurance kicks in.

If you face a third party liability compensation claim, your liability insurance could pay out to cover your legal expenses as well as the compensation payment, up to the limit of your policy.

3) FALSE

Subrogation is a term describing a legal right held by most insurance carriers to legally pursue a third party that caused an insurance loss to the insured. This is done in order to recover the amount of the claim paid by the insurance carrier to the insured for the loss.

4) FALSE

The doctrine of utmost good faith, also known by its Latin name uberrimae fidei, is a minimum standard, legally obliging all parties entering a contract to act honestly and not mislead or withhold critical information from one another. The doctrine of utmost good faith applies to many everyday financial transactions and is one of the most fundamental doctrines in insurance law.

5) FALSE

Third-party insurance is an insurance policy purchased for protection against the claims of another. One of the most common types is third-party insurance is automobile insurance. Third-party offers coverage against claims of damages and losses incurred by a driver who is not the insured, the principal, and is therefore not covered under the insurance policy. The driver who caused damages is the third party.