Insurance
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INSURANCE. I. Insurance is a scheme based on probability of events occurring and the pooling of risks to restore its contributors to their prior position if the event occurs. Difference between insurance & assurance. Insurance – involves the probability of a risk

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INSURANCE

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Insurance

INSURANCE

I

Insurance is a scheme based on probability of events occurring and

the pooling of risks to restore its contributors to their prior position if

the event occurs.


Difference between insurance assurance

Difference between insurance & assurance

Insurance – involves the probability of a risk

occurring eg. getting sick

Assurance – is based on a risk that is bound to

occur eg. death


Principles of insurance

Principles of Insurance

  • Indemnity

  • Insurable interest

  • Utmost good faith

  • Proximate cause

  • Subrogation

  • Contribution

  • Benefits


Types of insurance

Types of Insurance

  • Life assurance & endowment

  • Marine insurance

  • Motor Insurance

  • Health Insurance

  • Business Insurance

    • Fire

    • Burglary

    • Employer’s Liability

    • Plate Glass

    • Bad Debts

    • Goods in transit


Practice question

Practice Question

  • (a)List TWO responsibilities of a government to its citizens.

  • (b)Government can assist business by providing them with subsidies.

    Governments can also assist consumers through price control measures.

    • Define the terms ‘subsidy’ and ‘price control’.

  • (c )Dave recently opened a small appliance store. He sells radios, television sets, stoves and refrigerators. Dave was advised that he should insure his business.

    • (i)List THREE principles upon which insurance is based.

    • (ii)State how the principles identified in (c)(i) above will apply to Dave’s appliance store if he insures the business.

  • (d)Dave is thinking of expanding his business. He approached his bank for a loan. Dave was advised that he can use his house as collateral for the loan but ONLY if the house is insured.

    • (i)Define the term ‘collateral’.

    • (ii)Explain why the bank requires that Dave’s house MUST be insured if he intends to use it as collateral for loan.


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