Which of the following is not a principle of insurance?

This question tests knowledge of the recognized principles that govern insurance contracts, which are insurable interest, utmost good faith, indemnity, subrogation, contribution, and proximate cause.

Each of these principles has a specific meaning. Insurable interest requires that the person taking out a policy will suffer a genuine financial loss if the insured event occurs. Indemnity means the insured should be restored to the same financial position they were in before the loss, no more and no less. Subrogation allows the insurer, after paying a claim, to take over the insured's right to recover the loss from any third party responsible for it.

"Insurable risk" is not one of the formally recognized principles of insurance; it is simply a general description of a risk that is capable of being insured, rather than a rule that governs how an insurance contract operates or how claims are settled. Because it does not describe an operating principle of insurance in the way that indemnity, subrogation, and insurable interest do, it is the term that does not belong among the principles of insurance.

When a list mixes formally named principles with a general descriptive phrase, the descriptive phrase, one that only labels a category rather than a rule governing the contract, is usually the option that is not a true principle.