Insurance and Assurance

Question 1

What is insurance

Answer 1

A legal contract or an agreement in which an insurer promises to pay a specified
amount to another party,

Question 2

How does insurance differ from assurance

Answer 2

Insurance differs from assurance in that insurance covers
risks that may occur e.g. theft, fire, accident, and assurance covers events that will occur
such as death

Question 3

What are the principles of insurance

Answer 3

Indemnity
Insurable interest
Utmost Good Faith
Proximate Cause
Contribution 
Subrogation

Question 4

Explain Indemnity and Insurable interest bozo

Answer 4

Indemnity- Restoring the insured to his original position. It is putting someone back in the
the position they were in before the loss.

Insurable interest- The insured must have a vested interest in what is being insured. For
For example, someone is not allowed to ensure his neighbor’s house.

Question 5

Explain Utmost Good Faith and Proximate cause >:))

Answer 5

Utmost Good Faith- The insured must be truthful. The parties to the insurance contract must disclose all relevant information with
absolute honesty.

Proximate Cause - The damage caused must be close or proximate to the event insured
against.

Question 6

Explain Contribution and Subrogation >:0

Answer 6

Contribution – This principle prevents persons from ensuring identical risks on the same property
with several companies and thus profiting if they suffer loss.

Subrogation -This is an extension of the principle of indemnity, that is, the insured should be
reinstated to his exact position before the loss.

Question 7

OKAY BOZO, what are some types of Insurance Policies >;)

Answer 7

1. Life Assurance
   (a) Whole Life Assurance
   (b) Endowed Assurance
2. Term and Business Insurance
   (a) Fire Insurance
   (b) Burglary Insurance
   (c) Bad Debts Insurance
   Covers debts that cannot be collected
   (d) Plate Glass Insurance
   (e)Fidelity Guarantee Insurance
   (f) Employers’ Liability Insurance and Public Liability
   (g) Motor Insurance
   (ii)Comprehensive
   (h) Marine Insurance
   This policy covers losses due to damages to ships and cargo at sea.

Question 8

OKAY…explain Fire Insurance, Plate Glass, Whole Life, and Motor INSURANCE POLICIES >:)) (Comprehensive too TCT)

Answer 8

Fire insurance: Covers loss or damages to assets by fire

Plate Glass: Covers the replacement of shop windows as well as any injury to staff and customers that may be
caused by its breakage

Whole Life Assurance: Payment will be made upon the death of the insured. The beneficiaries of the insured will be paid.

Motor Insurance: [Third party] – Only third parties e.g. passengers are covered. The driver and car are not covered.

Comprehensive – Covers loss due to damages to the driver and third parties.

Question 9

Importance of insurance to business? :0

Answer 9

> > > It encourages enterprise or industry by covering the risk of business firms
Facilitates trade between countries whereby, businesses would be compensated for losses
during transit.
Provides a source of capital since they may also act as investors.
Provides coverage against personal risk when an individual is not able to manage it.