Economics · Insurance Principles
Consider the following statements and select the correct option: Assertion (A): The Principle of Insurable Interest is a foundational legal requirement that must be satisfied for an insurance contract to be considered valid and enforceable within the Indian financial system. Reason (R): This principle mandates that the insured must have a direct financial stake in the subject matter of the insurance, such that they suffer a financial loss upon the occurrence of the insured peril, thereby preventing insurance from being used as a mechanism for speculative gambling.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).✓
- 2Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
- 3Assertion (A) is false, but Reason (R) is true.
- 4Assertion (A) is true, but Reason (R) is false.
Correct answer
Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
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