Explain each of the following classes of insurance: (a) Marine insurance (b)Accident insurance (c)Group insurance (d) Fidelity Guarantee insurance (e) Conse...

Answer Details

The following are classes (branches) of insurance:

(a) Marine insurance

This is insurance that covers risks connected with the sea and sea transport. It protects against loss of or damage to the ship (hull), the cargo it carries, and the freight, arising from perils such as storms, collision, sinking and piracy. It may cover the voyage or a period of time.

(b) Accident insurance

This class covers a wide range of risks not connected with marine, fire or life. It includes cover against personal injury or death by accident, motor accidents, burglary, theft and employer's liability. The insurer pays compensation when the insured suffers loss or injury from the accident insured against.

(c) Group insurance

This is a single policy that covers a number of people, usually the employees of one organisation, under one master contract. The lives or persons of the whole group are insured together, often paid for by the employer, and each member enjoys cover without taking out a separate individual policy.

(d) Fidelity Guarantee insurance

This protects an employer against loss caused by the dishonesty, fraud or embezzlement of his employees, especially those who handle cash or goods. If such a trusted employee defrauds the employer, the insurance company makes good the loss.

(e) Consequential Loss Insurance

Also called loss-of-profit or business-interruption insurance, this covers the loss of profit and continuing standing expenses (such as rent and salaries) that a business suffers because its operations are interrupted after an insured event such as fire. It compensates for the indirect losses that follow the direct damage.