Insurance Flashcards
Learn all about insurance
What is insurance?
Insurance can be defined as an agreement between two parties whereby one party promises to indemnify or pay another party a sum of money in the event of his suffering a specified loss or damage
What is assurance?
Assurance is the provision of cover against some eventuality which most occur sometime in the future
Differences between insurance and assurance?
Insurance… The risk insured against may not occur
While Assurance… The risk insured against is certain to occur
Insurance… It is provision of cover against eventualities that may not occur
While Assurance… Is provision of cover against eventualities that is certain to occur
Insurance… It hinges on probabilities
Assurance… It hinges on possibilities
What is insurable risk?
Insurable risks are the type of risks the insurer can make provision for because it is possible to collect,calculate and estimate the likely future losses
What is non-insurable risk?
These are the type of risks which the insurance company is not ready to insure against simply because the likely future losses cannot be calculated or estimated
Examples of non insurable risk are??
Gambling Loss of profit through competition Launching of new product Risk due to war Opening of a new shop
What is indemnity insurance?
This is the type of insurance in which the insured is restored back to his former position before the accident occurred by receiving compensation
What is non indemnity insurance?
This refers to those risks which no amount of compensation could equate to the loss suffered by the insured. However only a consolation payment is made to the insured
Basic principles of insurance
Indemnity Insurable interest Utmost good faith(Uberrimae Fides) Contribution. Proximate cause Subrogation Abandonment
What is indemnity?
Indemnity is the compensation given to the insured by the insurer in the event of his suffering a loss e.g if a man loses a car,he will be compensated for it
What is insurable interest?
This is one of the principle of insurance that states that,one can only insure properties that will bring loss or liabilities to him upon destruction. The properties of a neighbour or friend cannot be insured by the individual. E.g you cannot insure the car of your friend
Utmost good faith
This principle states that in any insurance contract,all relevant information that got will affect the validity of the contract most be disclosed by the parties involved
Contribution
This principle states that where a person has insured a certain risk with many insurance company, he cannot claim compensation in full from each of the insurance companies
Proximate cause
This principle states that only the losses of liabilities which arise from the direct and immediate cause of event insured against are indemnified
Types of insurance?
A) Life insurance B)Non life insurance i. Bad debts insurance ii. Goods in transit insurance iii. Group insurance iv. Cash in transit insurance v. Fidelity guarantee insurance vi. Export credit guarantee insurance vii. Agricultural insurance viii. Burglary, theft,and robbery insurance ix. Consequential loss insurance x. Contractor all risk insurance xi. Employers liability insurance xii. Aviation insurance xiii. Accident insurance xiv. Motor vehicle xv. Marine insurance xvi. Fire insurance
