Scribd
Upload
4 views1 page

Insurance

Insurance is a contract where the insured pays a premium to the insurer for protection against financial loss from specified risks. Key principles include utmost good faith, insurable interest, and indemnity, while types of insurance cover areas such as life, fire, motor, and marine. Insurance is important for financial security, encouraging savings, aiding business recovery, and promoting economic development.

Uploaded by

chemistitonium
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
4 views1 page

Insurance

Insurance is a contract where the insured pays a premium to the insurer for protection against financial loss from specified risks. Key principles include utmost good faith, insurable interest, and indemnity, while types of insurance cover areas such as life, fire, motor, and marine. Insurance is important for financial security, encouraging savings, aiding business recovery, and promoting economic development.

Uploaded by

chemistitonium
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Insurance

INSURANCE
Commerce Notes — Meaning, Principles, Types & Importance

1. Meaning of Insurance
Insurance is a contract in which an individual or business (the insured) pays a sum of money (premium) to an insurance company (the insurer) in
exchange for protection against financial loss arising from a specified risk.
It is a method of spreading risk among many people so that the loss suffered by a few is borne by the many.

2. Basic Terms
• Premium: The amount paid regularly by the insured to the insurer.
• Policy: The legal document that contains the terms of the insurance contract.
• Claim: A formal request for payment after a loss has occurred.
• Indemnity: Restoration of the insured to the financial position they were in before the loss.
• Risk: The possibility of loss or damage.

3. Principles of Insurance
• Utmost Good Faith (Uberrimae Fidei): Both parties must disclose all material facts honestly.
• Insurable Interest: The insured must stand to suffer financial loss if the event occurs.
• Indemnity: The insured should not make a profit from the insurance claim.
• Contribution: If the same risk is insured with more than one company, each contributes proportionally.
• Subrogation: After paying a claim, the insurer takes over the insured’s right to recover from a third party.
• Proximate Cause: The nearest or direct cause of the loss is considered.

4. Types of Insurance
Type What it covers
Life Insurance Payment on death or after a fixed period
Fire Insurance Loss or damage caused by fire
Motor Insurance Vehicles (comprehensive or third party)
Marine Insurance Ships and cargo
Burglary/Theft Loss from theft or break-in
Accident Insurance Personal injury or accident
Fidelity Guarantee Loss from employee dishonesty

5. Importance of Insurance
• Provides financial security and peace of mind.
• Encourages savings (especially life insurance).
• Helps businesses recover quickly after losses.
• Promotes trade and investment by reducing risk.
• Generates employment and contributes to economic development.

— End of Notes —

Page 1

You might also like