Indemnity

Aperçu

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.

Objectifs

  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

Note de cours

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.

Évaluation de la leçon

Félicitations, vous avez terminé la leçon sur Indemnity. Maintenant que vous avez exploré le concepts et idées clés, il est temps de mettre vos connaissances à lépreuve. Cette section propose une variété de pratiques des questions conçues pour renforcer votre compréhension et vous aider à évaluer votre compréhension de la matière.

Vous rencontrerez un mélange de types de questions, y compris des questions à choix multiple, des questions à réponse courte et des questions de rédaction. Chaque question est soigneusement conçue pour évaluer différents aspects de vos connaissances et de vos compétences en pensée critique.

Utilisez cette section d'évaluation comme une occasion de renforcer votre compréhension du sujet et d'identifier les domaines où vous pourriez avoir besoin d'étudier davantage. Ne soyez pas découragé par les défis que vous rencontrez ; considérez-les plutôt comme des opportunités de croissance et d'amélioration.

  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

Livres recommandés

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Année: 2016
ISBN: 978-0-13-408257-8
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Fundamentals of Risk and Insurance
Fundamentals of Risk and Insurance
Sous-titre: Tenth edition
Éditeur: Wiley
Année: 2008
ISBN: 978-0-470-08753-4
Description: 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
Sous-titre: Second edition
Éditeur: Himalaya Publishing House
Année: 2017
ISBN: 978-93-5097-079-9
Description: An accessible treatment of insurance in four parts: the basics of risk, insurance management, life insurance and non-life insurance.

Questions précédentes

Vous vous demandez à quoi ressemblent les questions passées sur ce sujet ? Voici plusieurs questions sur Indemnity des années précédentes.

WAEC SSCE - Insurance - 2015

Question 1 Rapport

List and explain five principles of insurance.

Voir la réponse