One of Waata's staff members has been out on sick leave because she had an emergency appendectomy. She brought the hospital bills in to Waata for his opinion. It seems she had been covered by two health insurance policies for some time and now she thinks she may be able to collect from both companies in payment for the operation. Waata assured his employee that
A) she could look forward to a check from both companies once they had paid the medical bills.
B) because of the rule of indemnity she would not be able to profit from her operation.
C) because of the law of large numbers both insurance companies would pay her directly.
D) because her risk was insurable, she would be able to collect from both insurance policies.

Question

Quizplus · Accepted Answer

The rule of indemnity says that an insured person or organization cannot collect more than the actual loss from an insurable risk. One cannot gain from risk management; one can only minimize losses. One cannot, for example, buy two insurance policies and collect from both for the same loss.

One of Waata's Staff Members Has Been Out on Sick