What is insurance?


What is insurance
what is insurance 



There are many misfortunes which an individual or business can experience. Such misfortunes may be in the form of fire hazard which may destroy a house and all the property in it. Death itself, irrespective of how it comes could be a misfortune for those left behind. Insurance is a way of guarding against such risk.


Meaning of insurance:


Insurance is a protection against the loss of property and life. With regard to property, insurance covers practically everything an individual or business owns (building, vehicles, and even cloths). Insurance can be taken out on practically anything for which risk is associated. For example the owner of a football club may decide to take up an insurance on the life of it players and management team, especially when he thinks playing a particular match is a risk to lives of the individuals involved. In the same way, a businessman can take out insurance on the goods he is delivering to an individual or business.


Insurance and the businessman:


Being in business is a risk. Once an individual or group of individuals has pooled together their wealth in a business, their intention is to make profit. The profit is a return on their investment. It is possible to make a profit and it is return on their investment. It is possible for someone intentionally or by mistake to set fire to the building that house the companies equipment and machinery. In anticipation of such a loss, the company can take out insurance to cover some part or all of such loss. Insurance is very significant to the businessman for several reasons; three of which are:

1.      To help minimize losses to equipment and factory

2.      Provide enough security for goods under shipment

3.      To help families whose breadwinner may die accidentally while he his working.


Types of insurance


There are several forms of insurance in Nigeria some of these coverage are:

Vehicle insurance

This form of insurance can be taken out by any person or business that owns a car. Once the individual has taken out such insurance, he is covered against a specific loss. There are two basic form of vehicle insurance coverage; third party and comprehensive.


Third party insurance

This policy allows a driver whose car is hit to file claim against the driver in the wrong and who holds this type of policy. In other words, the insurance company insures the person which the policy holder may accidentally hit.  It provides protection against liability caused by a car accident.


Comprehensive insurance

This policy covers the loss of the individual who took out the policy and the person he hit. The policy holder can also recover a certain percentage, as high as 80%, of the cost of his car, if it is stolen, wash away by flood or damaged by a fallen tree.


Fire insurance

Fire insurance is coverage against fire hazard which may consume business premises or personal property. In recent years, there has been numerous fire hazards in public buildings. The losses associated with this building would have been enormous but for the fact that the owners of these building had insured them against fire hazard. At the occurrence of such fires, the insurance company would pay a sum agreed at the time of insurance. It must be emphasize that insurance companies are usually liable to pay a certain percentage of the cost of such buildings, and not the total value of the structure. For example, a house built in 1970 would cost much more money to build in 1986. Inflation may increase the cost rebuilding to over 300%. The insurance company is only liable to the value of the house at the time it was insured.

When a building is insured, the property owned by individuals who rent the apartment for business or living cannot claim from the insured amount. In the first place, such individual are not recognized as having an interest in the building. In order to minimize the risk of loss, the individual property owners in the building would need to insure their own property against fire.

Life insurance


What is premium?


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