Contribution is a corollary of which principle of insurance?

Contribution is a corollary of the principle of indemnity in insurance. The principle of indemnity states that an insured should not profit from a loss but should be restored to the financial position they were in prior to the loss. This makes sense because insurance is designed to compensate for losses rather than to provide a profit.

When multiple insurance policies cover the same risk, contribution comes into play. It dictates that when a loss occurs, each insurer is liable to pay a proportionate share of the loss, based on the amount of coverage they provide. This ensures that the insured does not receive more than the actual loss suffered, thus adhering to the principle of indemnity.

The other principles, such as insurable interest, subrogation, and utmost good faith, serve different functions within the insurance framework and do not directly address the issue of multiple insurers compensating for the same risk. Insurable interest relates to the requirement that the insured must have a stake in the risk being covered; subrogation involves the insurer's right to pursue a third party for recovery after paying a claim; and utmost good faith requires both parties to engage in honest communication throughout the insurance contract. Each of these principles supports the contractual foundation of insurance, but they do not pertain