Insurance

Question 1

What is insurance?

Answer 1

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

Question 2

What is assurance?

Answer 2

Assurance is the provision of cover against some eventuality which most occur sometime in the future

Question 3

Differences between insurance and assurance?

Answer 3

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

Question 4

What is insurable risk?

Answer 4

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

Question 5

What is non-insurable risk?

Answer 5

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

Question 6

Examples of non insurable risk are??

Answer 6

Gambling
Loss of profit through competition
Launching of new product
Risk due to war
Opening of a new shop

Question 7

What is indemnity insurance?

Answer 7

This is the type of insurance in which the insured is restored back to his former position before the accident occurred by receiving compensation

Question 8

What is non indemnity insurance?

Answer 8

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

Question 9

Basic principles of insurance

Answer 9

Indemnity
Insurable interest
Utmost good faith(Uberrimae Fides)
Contribution. 
Proximate cause
Subrogation
Abandonment

Question 10

What is indemnity?

Answer 10

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

Question 11

What is insurable interest?

Answer 11

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

Question 12

Utmost good faith

Answer 12

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

Question 13

Contribution

Answer 13

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

Question 14

Proximate cause

Answer 14

This principle states that only the losses of liabilities which arise from the direct and immediate cause of event insured against are indemnified

Question 15

Types of insurance?

Answer 15

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

Question 16

What is marine insurance?

Answer 16

Marine insurance is a branch of insurance which covers losses or liabilities relating to ship and their cargoes against the dangers of perils of the sea

Question 17

Types of Marine insurance

Answer 17

Hull
Cargo
Ship owners liability
Freight insurance

Question 18

What is hull insurance?

Answer 18

Hull insurance is a policy which covets ship against damages caused by the perils of the sea

Question 19

What is cargo insurance?

Answer 19

Cargo insurance is a policy that is entered into to cover goods of cargoes carried by a ship. It is taking to cover loss arising from damage to cargo while in transit

Question 20

What is ship owners liability?

Answer 20

This type of insurance covers all risks or losses for which the owner of the ship or its employees are liable for negligence in handling of goods, injury to crew on board, damage to other ship or to oort

Question 21

Importance of insurance

Answer 21

It facilitates international trade
It provides a means of saving e.g endowment policy
It serves as collateral security
It helps in motivating workers
Provision for old age and disability

Question 22

Terns frequently used in insurance industry

Answer 22

Actuary
Proposal form
Cover note
Insurance policy
Premium
Surrender value
Insurer
Insured
Jettison
Brown card

Question 23

Actruary

Answer 23

This is a person involved in life assurance, assessing the risks and calculating the premium and handling matters connected with pension funds

Question 24

Proposal form

Answer 24

This is a form that must be completed by a person wishing to enter into an insurance contract

Question 25

Cover note

Answer 25

This is a temporary insurance cones to enable the insured to enjoy the benefits of a policy while it is being possessed

Question 26

Insurance policy

Answer 26

This is a document which sets out the exact terms of an insurance contract

Question 27

Premium

Answer 27

This is the payment made to an insurance company for an insurance policy. It can be annually, weekly or monthly

Question 28

Surrender value

Answer 28

This is the amount in cash the insurance company will repay to am endowment policy holder if he wishes to discontinue prior to the date of maturity