Indemnity

Overzicht

Insurance exists to put you back on your feet, not to make you rich. That single idea is the principle of indemnity, and it quietly governs almost every claim ever paid. It explains why a three year old laptop is not replaced with a brand new one, why a trader who insures a shop for less than it is worth recovers less than the fire destroyed, and why the insurer, not the insured, usually decides whether to repair or to pay cash.

In this lesson you will learn what indemnity really means, the four ways an insurer can deliver it, and the limits that decide how much money actually reaches the claimant: the sum insured, average, the excess and the franchise. You will work through the calculations examiners set every year, meet the two classes of insurance to which indemnity does not apply at all, and learn the traps that cost candidates easy marks.

Doelstellingen

  1. Define indemnity and explain how it restores the insured to the former financial position
  2. Explain why indemnity prevents the insured from profiting from a loss
  3. Describe the methods of providing indemnity: cash payment, repair, replacement and reinstatement
  4. Explain the operation of average, excess, franchise and the sum insured as limits on indemnity
  5. Identify the contracts of insurance to which indemnity does not apply and explain why

Lesnotitie

A trader in Onitsha insures her shop and stock, pays her premium faithfully for six years, and then loses everything in a fire. She expects a cheque for what the shop was worth. What she receives is smaller, and she cannot understand why. The answer is not that the insurer is cheating her. It is that every general insurance policy she has ever signed is a contract of indemnity, and indemnity has rules. Understand those rules and you understand how nearly every claim in the market is settled.

Lesevaluatie

Gefeliciteerd met het voltooien van de les op Indemnity. Nu je de sleutelconcepten en ideeën, het is tijd om uw kennis op de proef te stellen. Deze sectie biedt een verscheidenheid aan oefeningen vragen die bedoeld zijn om uw begrip te vergroten en u te helpen uw begrip van de stof te peilen.

Je zult een mix van vraagtypen tegenkomen, waaronder meerkeuzevragen, korte antwoordvragen en essayvragen. Elke vraag is zorgvuldig samengesteld om verschillende aspecten van je kennis en kritisch denkvermogen te beoordelen.

Gebruik dit evaluatiegedeelte als een kans om je begrip van het onderwerp te versterken en om gebieden te identificeren waar je mogelijk extra studie nodig hebt. Laat je niet ontmoedigen door eventuele uitdagingen die je tegenkomt; beschouw ze in plaats daarvan als kansen voor groei en verbetering.

  1. The principle of indemnity means that the insured is: A. Paid the original cost of the property B. Restored to the same financial position held immediately before the loss C. Paid the cost of replacing the property with a new one D. Paid the sum insured in every case Answer: B
  2. Which of the following is NOT a method of providing indemnity? A. Cash payment B. Repair C. Replacement D. Subrogation Answer: D
  3. Property worth 2,000,000 naira is insured for 1,500,000 naira under a policy subject to average. A fire causes a loss of 800,000 naira. How much will the insurer pay? A. 800,000 naira B. 600,000 naira C. 500,000 naira D. 1,500,000 naira Answer: B
  4. Which of the following is NOT a contract of indemnity? A. Fire insurance B. Motor own damage insurance C. Life assurance D. Marine cargo insurance Answer: C
  5. The first amount of every claim which the insured must bear is called the: A. Franchise B. Excess C. Salvage D. Premium Answer: B

Aanbevolen Boeken

Principles of Risk Management and Insurance
Principles of Risk Management and Insurance
Ondertitel: Thirteenth edition
Uitgever: Pearson
Jaar: 2016
ISBN: 978-0-13-408257-8
Beschrijving: The standard introduction to risk and insurance, covering risk management, insurer operations and the main lines of life, health, property and liability cover.
Fundamentals of Risk and Insurance
Fundamentals of Risk and Insurance
Ondertitel: Tenth edition
Uitgever: Wiley
Jaar: 2008
ISBN: 978-0-470-08753-4
Beschrijving: A clear account of the nature of risk and the economics of insurance, written for beginning students across life, health, property and liability insurance.
Fundamentals of Insurance
Fundamentals of Insurance
Ondertitel: Second edition
Uitgever: Himalaya Publishing House
Jaar: 2017
ISBN: 978-93-5097-079-9
Beschrijving: An accessible treatment of insurance in four parts: the basics of risk, insurance management, life insurance and non-life insurance.

Eerdere Vragen

Benieuwd hoe eerdere vragen over dit onderwerp eruitzien? Hier zijn een aantal vragen over Indemnity van voorgaande jaren.

WAEC SSCE - Insurance - 2015

Vraag 1 Verslag

List and explain five principles of insurance.

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