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General Questions

What is Insurance?

  • Insurance is the means by which those unfortunate enough to be the victim of some loss can gain compensation.
  • Insurance Companies are able to offer protection by grouping together a large number of people who all feel exposed to the same risk.
  • The Insurance Company gathers these people together estimating that in any one very few in the group will actually suffer any loss.
  • By collecting an amount of money out of which the losses suffered by the few victims can be paid.
  • The money paid to an insurance company is called a premium. It is a very small amount in relation to the value of the loss it is intended to cover.

Why should I have Insurance ?

Insurance is there to help the unfortunate few who find themselves the victim of Loss or Accident.

Some forms of insurance are compulsory, for example; Motor Vehicle Insurance. It is illegal to drive a motor vehicle without insurance that would at least compensate third parties (parties other than the owner) for damages done to their property or injuries to their person which was caused by this vehicle. It may also be mandated by Creditors.

People would be very unwise if they did not purchase insurance to protect themselves against having to meet unexpected costs.

Insurance gives people and organizations the security they need. It relieves them of great financial hardship and in some cases helps to avoid bankruptcy. It gives you peace of mind.

What are the benefits of having insurance ?

It relieves those insuring, particularly businesses, from the worry and anxiety they may have about how they would meet the cost of risk. In the case of businesses, this is a positive stimulus to their activities and allows them to get on with their own business in the knowledge that they are financially protected against many forms of risk.

Business people will be more inclined to risk their money by building factories, making goods, sailing ships, flying planes, with the knowledge that they will not lose everything should they fall victim of some risk. This is an extremely important benefit which insurance brings — not only to the individual insuring but to the whole country — as stimulating businesses makes for a healthy economy.

Who would pay compensation to the injured motor accident victim, who would pay for the repair of damaged property? In short, who? Would provide the money which the current insurance market provides At the moment, insurance companies pay many millions of dollars every day. In relieving the State of this burden, the insurance industry performs a considerable public service.

How do I budget for Insurance?

It is evident that insurance should be a vital component of business operations. Accordingly it should be properly budgeted for in your business plan.

Depending on the nature of your business this can vary between five and ten percent of your revenue. It is advisable to seek a broker's advice on this component.

Who provides insurance ?

  • Insurance Companies.
  • Lloyds of London.
  • Reinsurance Companies.
  • Captive Insurance Companies

Do you have any advice I can follow?

YES!

  • Budget for Insurance costs
  • Utilize premium funding options
  • Always be adequately insured
  • Always use an Insurance Broker

 

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Insurance Principles

What are the founding principles of insurance ?

  • INSURABLE RISKS
  • INSURABLE INTEREST
  • UTMOST GOOD FAITH
  • INDEMNITY

What is Insurable Risk?

To benefit from the advantage of insurance protection, a risk must have the following characteristics:

  • It must be measurable.
  • There must be a large number of similar risks.
  • It must not involve any prospect of gain or profit.
  • The loss must be fortuitous/accidental.

What is Insurable Interest?

To insure a risk, one must have a legally recognized financial interest in what/who is injured.

What is Utmost Good Faith?

In all contracts, each party must observe good faith and must not wilfully mislead the other or perform any fraudulent act. However, there are a few types of contract, of which insurance is one, where a special relationship exists between the parties and they owe a greater duty to each other, that of utmost good faith. This means each must disclose all material facts to the other. In ordinary contracts, one need only disclose facts if asked, but in insurance all facts must be disclosed whether asked for or not.

A material fact is one which would influence a decision to accept a risk and on what terms.

The insurer must reciprocate by not misleading the insured and by honoring the contract.

What is Indemnity?

The principle of indemnity is that if insurance provides the value of this loss, then the insured will be neither worse nor better off after a loss than before.

One cannot put a value on one's own life or limb and therefore these policies are not subject to the doctrine, but all property and liability policies are.

Ideally, the insurer's liability will be indemnity, but there are various ways in which the liability may be less than indemnity. It is therefore very important to be adequately insured.

 

 

Classes of Insurance

What are the Key Classes of Insurance?

  • PROPERTY
  • MOTOR VEHICLE
  • LIABILITY
  • PECUNIARY LOSS
  • MARINE, AVIATION AND TRANSPORT
  • INSURANCE OF THE PERSON
  • EMPLOYEE BENEFITS/WELFARE

What is Property Insurance?

These provide for protection of:

  • Property/Assets of Insured's
  • Third Parties and the interests of Creditors, (if any).

They include:

  • All Risks
  • Fire and Special Perils
  • Contractors All Risk
  • Boiler and Machinery
  • House owners/Householders

What is Motor Vehicle Insurance?

These provide protection for loss by accident, theft, fire and can be arranged on the following basis:

  • Third Party Only (Compulsory by law)
  • Third Party, Fire and theft (Own damage not covered)
  • Comprehensive Private( Full Coverage)
  • Commercial

What is Liability Insurance?

These provide protection against liability to person or property of other parties. They include:

  • Public Liability
  • Workmen’s Compensation/Employers Liability
  • Product Liability
  • Professional Indemnity

These are essential when tendering for Contracts and some or all may be mandatory.

What is Pecuniary Loss Insurance?

These provide financial protection and include:

  • Money
  • Fidelity
  • Burglary
  • Consequential Loss
  • Bonds

What is Marine, Aviation & Transport Insurance?

These provide protection for loss or damage to goods whilst in transit to or from the insured. They Include:

  • Marine Hull
  • and Goods in Transit

What is Insurance of the Person?

These provide protection for Loss of life or Limb and include the following:

  • Life Insurance (Term and Whole Life)
  • Key Man Insurance (Life and Personal accident)
  • Personal Accident Annuities

What are Employee Benefits?

These provide welfare Benefits to Employees and include:

  • Group Medical Plans
  • Group Life Plans
  • Group Personal Accident Plans
  • Group Pension/Annuity Plans

 

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Insurance Intermediaries

What is an Insurance Intermediary?

An Insurance Intermediary is a person or entity who stands between the buyers of insurance and the sellers.

Insurance Agents are those who represent a specific insurance company or sellers of insurance.

Insurance Brokers are those who represent the buyers of insurance.

What is an Insurance Broker?

An insurance Broker is a person or firm who brings buyers of insurance or reinsurance together with the sellers. They act independently and have a freedom of choice within the market on where to place business. They carry our preparatory work, and assist in the performance and administration of contracts including the handling of claims. An Insurance Broker represents its clients, however, it is remunerated by the Insurance Companies where the insurance is placed.

By using an Insurance Broker, a buyer can obtain valuable advice on the best policy and insurer to cover their needs thus saving much time and expense.

An Insurance Broker is regarded as an expert in insurance and must act accordingly or be held liable for its mistakes or omissions

Does using an Insurance Broker increase my cost?

NO!

All insurers build a commission factor into their premium rates. These rates are the same whether you use a broker, an agent or go directly to the company.



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