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SS1: ECONOMICS - 3RD TERM

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  1. Mining | Week 1
    3 Topics
    |
    1 Quiz
  2. Financial Institution I | Week 2
    7 Topics
    |
    1 Quiz
  3. Financial Institutions II | Week 3
    5 Topics
    |
    1 Quiz
  4. Financial Institutions III | Week 4
    5 Topics
    |
    1 Quiz
  5. Business Organisation | Week 5
    3 Topics
  6. Money | Week 6
    5 Topics
    |
    1 Quiz
  7. Channels of Distribution I | Week 7
    5 Topics
    |
    1 Quiz
  8. Channels of Distribution II | Week 8
    6 Topics
    |
    1 Quiz
  9. Business Finance | Week 9
    7 Topics
    |
    1 Quiz



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Insurance

An insurance company can be defined as a financial institution involved in the protection of persons and objects against risks.

What is Insurance?

Insurance can be defined as a contractual agreement to indemnify/pay compensation to a party or person in case of loss/damages.

Compensation is always based on the premium paid and the extent of the loss. The premium in insurance is defined as the payment made to an insurance company in order to have an insurance policy.

Insurance is one of the aids to trade which offers monetary assistance when needed. Insurance is an agreement where one party promises to indemnify or pay another party a sum of money in the event of suffering a specific loss or damages. 

In insurance, the term “risk pooling” refers to the spreading of financial risks evenly among a large number of contributors to the program. They collect premiums from a group of people who suffer similar risks to a common fund out of which compensation will be paid to the person that suffers.

 We have two major forms of insurance, Assurance and Insurance. 

Assurance and Insurance:

Assurance can be referred to as the event/incident that must happen. It is the provision of cover against incidents/eventualities that must occur at a particular time in life e.g. Death. Insurance has to do with possibilities i.e. it may happen or may not happen

Differences between Assurance and Insurance:

S/n                          Assurance                            Insurance
1.The event/ incident must occur.The risk insured may not occur.
2.It has to take care of eventualities which must occur.The provision of incidents that may not occur.
3.It does not rely on possibilities because it is possible.It is based on possibilities.
4.A very good example is the Life Assurance policy.A few examples are Burglary, vehicle accidents, theft, marine, etc.

Principles of Insurance:

The principles of insurance are the things that must be fulfilled in insurance.

They include;

1. Indemnity.
2. Insurable interest.
3. Utmost good faith.
4. Contribution.
5. Proximate cause.
6. Subrogation.
7. Abandonment.

Functions of Insurance Companies:

1. Protection of persons and objects under different types of insurance like motor vehicle, fire, etc.
2. They serve as a pool of risks, that is, they are an umbrella under which all forms of risks are covered.
3. They offer advice to individuals, organizations, and governments.

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