Classes of insurance and policies
Insurance can be classified in three broad ways
1. By the functions it performs, thus the insurance of a person of the policy holder , the liability of the policy holder, the property of the policy holder, or the right and financial interest of the policy holder.
2. By the main classes of business
3. As contain in the insurance degree of 1976.
The type of classification that concerns us here is that of the main classes of business. We should however note that the various classes in this classification can be grouped simply into life or non life assurance which includes ordinary life assurance, industrial life assurance and annuities.
Non other insurance on the other hand comprises of the aviation insurance, marine insurance, fire insurance, motor insurance, accident insurance, engineering insurance,and also the fedelity guarantee insurance.
Aviation insurance:
This type of insurance of general air Transportation that includes the air craft owners, manufactures, passengers, users and other third parties.
The growth and development witness in the aviatiia sector in the 1970s brought about isuring aircraft. As at today the hull value is close to about 9000m and liable limited of about 2.5 billion. Critucal stake holders like the operators , manufactures and financial firm had to invest large sum if amount in the industry . And as the cannot afford to loose the entire part if the capital as a result of unforseen accident or damage , therefore the need and idea of spreading this high risks through the insurance industry becomes necessary and that give birth to the idea of insurance in aviation.
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This policies are in the aviation Insurance they as follows:
Hull risk insurance;
This is effected by aircraft operators, owners and anybody in whose custody of the aricraft may be . Here the insure undertake no pay , make good or replace any accident, damage or loss to the aircraft from any cause subject to exception contains in the policy, either when the aircraft is in flights while it is taxing or while it is parked on the groundd. Here the tyoe of cover will include aircraft hull, it's equipment, instruments and special accessories.
Passengers and passengers baggage legal liability insurance:
This is the type of insurance cover is effective by the air operator to guide and protect himself against any form of accident or damage this may include body injury or even deaths to any passengers. And it also includes liability for personal effects of such passengers. This will the applies in three cases while the passengers is entering into the plane , is being Carried by the plane or when moving out if the plane. The insure there fore indemnifies the insured against all amount that he might be liable to pay. The limie of liability is however fixed for each aircraft in respect of any passengers. This type of policy exclude employees and the contractor s
Third party legal liability insurance:
This one is effected by air craft operation to indeminfy himself for any amount which will be liable to pay in case of accident, death or injury in the body or even accidental damge of property to third parties or the public caused direct by the aircraft or objective falling from the aircraft. The third party risks include risks to other air craft and it's passengers while it is on the ground, and at times consequential loss. The manner for liability, has been regulated by international coventions and authority.
Air owners and operators liability insurance:
In Africa, Nigeria for example have about 20 twenty air ports. History has shown that the greater part of aviation accident happen at or around airport s ,either on take off or when landing . This type of insurance cover , hense , insures any owner or operator of an air ports against all forms of damge that may occur , he might be legally liable to pay in respect of any liability arising from the different types of activities the airport operation may undertaken which include s emergency services s, refueling , run way maintenance, baggage handling, air traffic control, air vehecles etc.
Marine insurance and policies
Marine insurance is believed to be the oldest form and known type of insurance. The early Phoenician traders first practiced this type of insurance although the modern marine insurance started in Italy at about 1347 by the lLOMBARDS.
Marine institute provide financial compensation in the respect of losses and damages. These are normally seen as perils of the sea which may include collision. Fire outbrake, theft stranding by pirates . In short any loss due to the action s of the see and of unexpected event of nature would normally be covered . The insurance of property under marine insurance is usually considered under marine hull colargo or freigth.
1. Hull related to the insurance of the actual vesseland all it's machinery and covers all perils of the nature of the sea.
2. Cargo her relates to good s or all the merchandise carried by the ship , and policies here are normally arrange for the duration of a voyage though other basis is constantly, and in often cases war risk are insured .
3. Freigth refers to the cost of transportation of such goods . In prepaid freight it since merge with the value of goods undertaken under cargo policy . Freight is however bi ng insured separately. The policies in marine insurance however vanes in the terms if the period for which the insurance operates.
Time policy:
This policy is for a specific and pre determined period of time ; usually noy exceeding one year and most hull insurance are in this basis.
Voyage policy:
This covers is operational from the port of departure to the port of birth or the destination irrespective of the time and such cover will terminate at about 3mouth after unloading at the destination.
Mixed policy:
This type of policy covers comprehensive lt in nature and hence combines both time and voyage.
Building risk policy;
This type of policy covers a vessel from time of the construction until it's trials are completed.
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Events in the past have shown the importance of marine insurance. Insurance way merchant and ships owners would be lazy or unwilling to allow third substantial investment to be thrown to such hazards in the maritime industry without protection of any kind, such as insurance. In the 2nd world war ships set on a voyage withouts some for of war risks insurance, and again the sinking of the tatinic in 1912 was renowed annual amount known as the annuity for a special period or for the reminder if the annuitants life's. this is a kind of guranteed income. The assurer therefore repays I instalment the annuitants capital and any interest that has been earned.
An annuity is the direct opposite of life assurance in the sense that ,bin life assurance contract the insurers risks that the policy holder will die earlier than expected,while annuity the risk to the insurers is that the annuitants will live longer than expected. There are two types of annuity:
1. Annuity certain
2. Annuity perpetuity
Annuity certain:
Is that which has a terminal date that is of annuity may not need the money after a certain time for example Europe where government take care of old people after certain age limit like 80years the annuitants can have anuity certain to terminate when he or she is over 80 years old.
Annuity perpetuity:
This is the annuity that has a continuous life till the person or the policy holder is dead . It is not profitable to the company if the individuals live longer. If he dies shortly after start of maturity it is profitable to the company. All annuities can be considered under two basic categories; immediate annuities; where payment commence as soon as the lump sum is received by the assurer or deffered annuities where payment commence at some time in the future. Events that illustrate the reality of enormous potential risks at sea .marine Insurance therefther becomes very significant in reducing at list the financial result s if disasters if that nature.
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Fire insurance:
Fire insurance has been proved to be a scourge if not handle carefully or when it becomes out our hand. Hundreds of live and property worth millions are damage and are cuased by fire incident each year. Fire insurance deals with the financial aspect yet the affected community still remains the loser. This loss is term in insurance as fire waste. A typical example of such fire waste was the greatest fire of London in 1966. Which promoted the formation of the fire insurance. Another instances promoting the fire insurance was the industrial revolution which concentrate of meant I'd buildings ? And machineries and the accumulation of vast stocks of raw materials and goods thus meant increment in both wealth and risks that needed to be protected through fire insurance. As fire insurance became well instituted other additional risk were included in the fire policy and called special perils such special perils include earthquake, flood, storm, lighting, riot and civil unrest. Fire insurance is however involved with the insurance of property.
Standard fire policy;
This type of policy compensate for loss or damage arising from burning . Here there must be actual ignition which is purely accidental. This also covers for lighting and explosions.
Special or additional perils:
Where additional premium is paid , the standard fire policy is extended to cover for loss and damage through earthquake,flood ,storms, tempest, thunder, riots and civil unrest impacts damages. Aerial device, bursting or overflowing of waters tanks , pipes or apparatus, land slide sprinkler leakages.
Consequential loss policy;
Although the physical loss or damage arising by fire can be compensated by the policies outline above , in addition to such material losses or damages, there are other losses to commercial firms resulting from disruption of business activities while repairs for fire disasters are bieng carried out hence a conseqeuntial loss possible can be arranged under fire insurance to cover for loss through lack of production.
Fire inspection is applicable to both private houses and business premises. A house owner can take out fire insurance to protect;
1. The building itself, that is the whole building structure which may be damage by the fire or any of the adding perils and may include architects and surveyor s fees .
2. The content of the building can also be insured which may include certian terms like electronic sets , furniture, paintings etc.
3. Liability to the third parties are also considerable for injuries and damages as a result of happenings to your buildings due to fire or special perils.
Business premises such as factories , Warehouses , show room , retail floor , hotels etc are all subject to risks of fire additional perils, thus fire insurance becomes necessary for the buildings, the machinery plants and equipment, stock of raw materials, finished goods and work in progress. Other additional perils in factories may include explosions of boilers or gas pipes, heating devices ,welding equipments, physical changes of property under manufacturing for example fermentation.
Motor insurance:
This class of insurance are for vehecles drivers and passengers and also the third parties.
1. The vehicle is exposed to risks of theft , accident and fire, drivers and passengers are exposed to death , injury and damage to properties while the third parties may suffer injury, death or damage of property.
There fore three main objective and policies are available;
The road traffic policy:
This type of policy provide for the death and injury of drivers and passengers arising from the use if the vehicle. This is more it or less compulsory to vehecles used on the road . This policy however does not include risk to the vehecle itself.
The third party policy;
This type of policy covers liability to the third party in respect of both injury and death , and damages to property included. In some cases ,legal costs are also included
Comprehensive cover;
This type of policy provide Insurance for all conservable risks that can happen to the vehicle including loss, accidents including fire and also liability to the third parties.
Accident insurance:
This type of insurance generally revolves around personal accidents and employees liability insurance.
The origin of personal accidents insurance was the introduction of rail ways system and so it was introduced to provide compensation for death and injuries sustained by rail way accident and the following policies are available;
1. What of the other policies?:
Here compasetion is provided for death or injuries caused by accidental, violoent, external and visible means . A specific huge amount of money is said to be paid for loss if life where let lesser amount are paid for loss of limbs eye , and such benefits are re-classified into either partial or full disabilities. In sickness such as loss if sigth or limbs or body injuries , the insurance company may pay capital amount with maintenance allowance on weekly basis . The allowance is normally paid after a waiting period.
Life assurance:
Providing for ones dependents has been a consideration of all prudent men and women through out the ages . The practice of this class of insurance started in the mediaeval times . Life assurance has aslo been linked to the early practitioners of marine insurance under writers. The first recorded life policy was in the 1583.
Life assurance serve two purposes.
1. A means of savings and ,
2. A source of financial relief to dependant s in the occurance of death of the policy holder.
This class of insurance is very important for every man and woman who serves in a capacity of bread winner of the family. Variety of contract are offered by life assurers but virtually all of them can be considered within the following descriptions.
1. Term assurance:
This type of policy is the oldest form of life policy; payment takes place only if the life assured dies within a specific period.
2. Whole life assurance:
This type of policy lasts for thewhile of the assureds life , and the sum is bieng paid only at death and the other characteristics of this policy is that premium maybe paid through out life or ceases at a certain advance age like 70 to 80 years. This policy is good for persons under normal health conditions.
3. Endowment assurance:
In the two policies mentioned above , the assured can never benefits personally from the process of such contract . The endowment policy however provides for the amount assured to be paid either at death or after death or after a fixed number of years , which ever comes first and it allows the assured to select the numbers if years at the time of contracting the policy. It is equally suitable for the family man . In the event of his death his dependents are provided for , but if he survived the term policy money is paid to him for which he uses as he so wishes.
4. Annuities:
This type of policy is more or less a form of pension rather than a life assurance. This type of policy under takes to pay the annuitants in return for a certian sum of money paid in lump sum or installation.
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