Suresh Rawat had purchased a bus by taking a loan from Ashley Transport Financers. The bus was being used as a private service vehicle, and not as a public transport one. It was insured under a comprehensive insurance policy issued by National Insurance Company for a sum of Rs.300,000/- The bus met with an accident, for which insurance was claimed. The insurance company appointed its surveyor, who assessed the actual loss at Rs.3,26,500 caused to the bus. However, the company surveyor also put a remark that Rs.33,000 be deducted from the assessed amount, on the ground that the driver did not have an endorsement on his licence to drive a transport vehicle. Even this amount was not paid to Suresh Rawat, but was directly paid to the Ashley Transport financers. Shri Suresh Rawat was not happy with this decision. He approached you with following specific queries, on which you are required to guide him.

q(1) What is Principle of Indemnity in Insurance Contract?

q(2) In case of under insurance, what rules are applicable for settlement of claim?

q(3) Can Insurance Company directly pay to the financier the insurance claim proceeds?