Insurance
▪ Indemnification: Compensation of actual loss to put insured in same position as before the
incident occurred.
▪ Risk: The likelihood of some uncertain event happening.
▪ Peril: What is actually covered by the contract.
▪ Hazard: Circumstance that increase the risk of the peril occurring.
▪ Security: Supply protection to the family / dependents by providing financial security in case of
death, retirement or disability.
▪ Average clause: The property is not insured for the full value; the full value of the loss will not be
paid.
o Under-insured: Property is not insured for full value. Premium is low. Full loss not covered.
o Over-insured: Goods are insured for more than its value. High premium. Insurer will not pay
more than the value. Insurer has option to restore or rebuild insured property.
▪ Excess: The amount of each claim that is not covered by the policy.
▪ Proximate cause: An event sufficiently related to an injury / loss that the courts deem the event
to be the cause of the injury /loss. The key principle to insurance and is concerned with how the
injury / loss actually occurred and whether it is covered.
▪ Subrogation: The principle of claiming only ONCE. You may not make a profit from insurance.
▪ Cession: Any rights that the insured has in the policy may be transferred to another person
when written clause is added to the policy.
Insurance: Refers to a contract between the insurer and insured whereby the insurer will
indemnify the insured for damage / loss of insured property, against a monthly premium. It protects
the value of assets and supply cover against possible risk. The premium is based on the level of risk
associate with it.
Non-insurable risk: War and associated risks, bad debts, business risks; i.e. price
fluctuations while in delivery, losses due to changes in fashion and technology, illegal activities and
severe natural disasters.
Insurable risk: Accidents, injuries, theft, burglary, fire, natural disasters and fraud
Requirements of a valid insurance contract
▪ Absolute good faith. Disclose all information to determine risk.
▪ Insurable interest. Proof loss when incident occurs.
▪ Contractual capacity. 18 years and older and of sound mind.
▪ Intention to bind.
Business Studies Insurance | 1
▪ Indemnification: Compensation of actual loss to put insured in same position as before the
incident occurred.
▪ Risk: The likelihood of some uncertain event happening.
▪ Peril: What is actually covered by the contract.
▪ Hazard: Circumstance that increase the risk of the peril occurring.
▪ Security: Supply protection to the family / dependents by providing financial security in case of
death, retirement or disability.
▪ Average clause: The property is not insured for the full value; the full value of the loss will not be
paid.
o Under-insured: Property is not insured for full value. Premium is low. Full loss not covered.
o Over-insured: Goods are insured for more than its value. High premium. Insurer will not pay
more than the value. Insurer has option to restore or rebuild insured property.
▪ Excess: The amount of each claim that is not covered by the policy.
▪ Proximate cause: An event sufficiently related to an injury / loss that the courts deem the event
to be the cause of the injury /loss. The key principle to insurance and is concerned with how the
injury / loss actually occurred and whether it is covered.
▪ Subrogation: The principle of claiming only ONCE. You may not make a profit from insurance.
▪ Cession: Any rights that the insured has in the policy may be transferred to another person
when written clause is added to the policy.
Insurance: Refers to a contract between the insurer and insured whereby the insurer will
indemnify the insured for damage / loss of insured property, against a monthly premium. It protects
the value of assets and supply cover against possible risk. The premium is based on the level of risk
associate with it.
Non-insurable risk: War and associated risks, bad debts, business risks; i.e. price
fluctuations while in delivery, losses due to changes in fashion and technology, illegal activities and
severe natural disasters.
Insurable risk: Accidents, injuries, theft, burglary, fire, natural disasters and fraud
Requirements of a valid insurance contract
▪ Absolute good faith. Disclose all information to determine risk.
▪ Insurable interest. Proof loss when incident occurs.
▪ Contractual capacity. 18 years and older and of sound mind.
▪ Intention to bind.
Business Studies Insurance | 1
