insurance/assurance

Question 1

Insurance/assurance

Answer 1

Insurance pertains to the risk or possibility of some event occurring, e.g. a motorcar accident. Assurance is based on a risk that is bound or known to happen, e.g. death.

Question 2

Benefits of insurance

Answer 2

 It is a form of saving and investment, for example in the case of endowment policies.
 It is a source of capital for business and householders, e.g. mortgages or loans to companies.
 It protects manufacturers and businesspeople against personal risks such as accidents at the plant, fire, burglary, etc.
 It protects exporters and shippers against the hazards of the sea, or damage or loss of cargo.

Question 3

Principles of insurance

Answer 3

Utmost good faith – this refers to the principle that at the outset both the insured and the insurer must disclose all relevant facts affecting the risk, the premium, and the nature and extent of the policy.
Indemnity – this is security from loss or damage; compensation for loss or injury so as to return the injured party to their original position.
Contribution- the amount that each insurance company has to pay in the case where a person insures identical risks on the same property through several companies, whereby any loss will be shared between those companies.
Proximate cause – the closest or most immediate cause of an insurance claim.
Risk – the risk of an event occurring that is stipulated in the policy makes the insurer liable, once the action of the insured is deemed an accident, e.g. damage due to negligence.

Question 4

Types of insurance

Answer 4

1. Life
2. Business
3. Marine

Question 5

Life insurance

Answer 5

is insurance that pays out a sum of money either on the insured person or after a set period.

Types of life insurance include:
Whole life policies – in this type of policy, a fixed sum is payable on the death of the insured.
 Endowment policies – in this type of policy, a stated sum is payable after a number of years or on the death of the insured, whichever occurs first. Endowment policies represent a form of saving in addition to providing assurance.

Question 6

Motor insurance

Answer 6

is a contract by which the insurer assumes the risk of any loss the owner or operator of the car
may incur through damage to property or persons as the result of an accident.
Types of motor insurance include:
 Comprehensive insurance – this type of insurance covers the owner/driver, the vehicle itself and any third party.
 Third party insurance – this type of insurance includes claims from passengers travelling in the insured vehicle and from any other persons injured as a result of an accident, and also any claims for damage to another vehicle or the property of third parties. The insured cannot claim for damage to his own vehicle or personal property.

Question 7

Marine insurance

Answer 7

covers the loss or damage of ships, cargo, terminals, and any transport or cargo by which the
property is transferred, acquired, or held between the points of origin and the final destination.
Types of marine insurance include:
 Hull insurance – this type of insurance covers any damage to the ship or damage to any other vessel.
 Cargo insurance – this type of insurance compensates the owners of cargo in the event of loss or damage.
 Ship owner’s liability – this type of insurance covers loss or damage to third parties, i.e. to crew, passengers and
port facilities.
 Freight insurance – this type of insurance provides the ship owner with coverage in the event that the cost of delivering cargo is not paid for by the cargo owner.