Question 5
Write explanatory notes on each of the following terms as used in insurance:
(a) Subrogation;
(b) Proximate cause;
(c) Premium;
(d) Barratry;
(e) Utmost good faith.
Observation
Most of the candidates performed poorly in this question. Some of the answers expected from the candidates are:
Subrogation - This is a principle which allows an insurance company to take over the rights of an insured once he is compensated.
Proximate cause - This principle states that there must be a close connection between the loss actually suffered and the risk insured against for the insured to be compensated.
Barratry - The term includes every wrongful act willfully committed by the master or crew of a ship to the prejudice of the owner or charterer.