A. Meaning of Insurance
Insurance can be defined as the process whereby there is protection against any risk that may terminate life or destroy the business or individual property. Loss of damage to property may arise from accident, theft, fire, flood and so on.
Insurance can also be defined as the transfer of risk of life or property from one person that insures himself (called the insured) to another person i.e. the insurance company (called the insurer) in return for a fixed amount (called premium) which the insured has made to the insurer.
Insurance is a contract between the insured and the insurer. If any property is lost or damaged, the insurer will pay the insurer insured an agreed sum of money called indemnity.
Insurance Companies in Nigeria
Insurance companies can be divided into categories, which are
Life Assurance : It is a contract between the person who takes out the policy called the assured and the assurance company. Examples of Life Assurance Companies are: AIICO Assurance Policy, GNI Life Assurance Ltd, Mutual Benefits Life Assurance Company Ltd etc.
Non-life insurance : Non life insurance performs other insurance function. They include Cornerstone Insurance PLC, Sovereign Trust Insurance PLC etc.
B. Basic Insurance Principles
The following principles are used in guiding the contract of insurance
1. Principle of subrogation : This principle states that an insurance company can take the place of the insured after it has indemnified him by making necessary payments.
2. Principle of indemnity: This principle of indemnity states that in the event of any loss the insured has to be restored to the position he was before the loss.
3. Principle of proximate cause : This principle states that the cause of the loss or damage must be linked with the risk that was originally insured against.
4. Principle of utmost good faith : The principle of utmost good faith states that both the insured and the insurer must disclose all relevant information to each other.
5. Principle of insurable risk: This principle states that insurance can only entered if into if the risks involved are insurable.
6. Principle of insurable interest : This principle states that no person can be allowed to insure anything in which he has no insurable interest.
C. Types of Insurance
1. Motor vehicle insurance : Motor vehicle insurance is the most popular and commonest type of insurance policy in insurance Nigeria because it is compulsory for every vehicle to be insured in Nigeria.
2. Burglary/ Theft Insurance: Burglary or theft insurance policy provides protection against loss or damage to the property of the insured as a result of burglary or theft.
3. Marine Insurance : Marine insurance is a compulsory insurance that is taken for ships and boats on seas. It is one of the oldest forms of insurance. It covers loss or damage over goods, the ships or boats carrying the goods also.
4. Life Assurance Policy : This provides protection against loss caused by the death of the person (assured). It helps to reduce the financial problem which the death of the people can cause.
5. Agricultural Insurance Policy : Agricultural insurance is the newest insurance policy introduce into the insurance market by the federal government. It covers loss or damage to crops, livestock's, pest inversion etc.
D. Importance of Insurance
The Importance of insurance are as follows:
It helps to reduce risk business or job means that encourages people to save
It facilitates international trade
It is a provision of old age
It is provision against lives and propert
A. Meaning of Insurance