All RE5 questions
Insurance Principles Legal Principles
Which fundamental principle of insurance requires the policyholder to stand to suffer a real financial loss in the insured life or item?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) Insurable interest.Correct
- b) Utmost good faith.
- c) Indemnity.
- d) Subrogation.
Why this is the answer
Insurable interest means the policyholder must face a genuine, measurable financial loss if the insured event occurs; without it the contract is a mere wager and is void. Utmost good faith concerns honest disclosure, indemnity concerns restoring the insured's position, and subrogation lets the insurer pursue third parties.
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