SS2 Commerce Lesson Note on Non-Life Insurance

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Non-Life Insurance.

1. Motor vehicle insurance: Motor vehicle insurance provides coverage for any loss the policyholder or owner of a car may suffer through damage to car or persons as a result of an accident. There are different forms of motor vehicle insurance. They are;

(i) Comprehensive policy: This covers damage or loss of the insured vehicle even to the third party. It is a comprehensive cover for an insured vehicle which is lost, damaged by accident, fire, theft and third party. This policy attracts higher premium and pays indemnity for any justifiable damage.

(ii)  Third party only: It covers liability for damage to the third party of the insurance policy and not the owner of the insured vehicle. It covers damage to the vehicle of the third party and liability for injuries or death to the third party. The premium for third party is low, It is mandatory for vehicle owners to insure against third party in Nigeria.

(iii) Third party, fire and theft: It covers for all events that the third party covers for, and in addition covers for damage or loss as a result of fire or theft. It attracts higher premium to third party but it is lower than comprehensive.

2. Liability: This type of policy covers the risk of liability for the injury or death of someone else. There are two main forms;

(i) Employer’s liability: It covers the employer’s legal liability for the safety of each employee.

(ii) Public liability: It covers the liability of individuals and business for the members of the public visiting their premises.

3. Fidelity: Fidelity insurance is used particularly by businesses to protect against loss by fraud and stealing by employees. The policy pay for the financial loss arising from the dishonesty acts of employee. It can only pay to the maximum amount specified for the employees. Fidelity insurance usually falls into two categories;

(i) Money and securities coverage pays for losses of money and securities taken by burglary, robbery, theft, disappearance and destruction.

(ii) Employee dishonesty coverage pays for losses caused by most dishonest acts of employee, such as embezzlement and theft.

4. Fire insurance: Fire insurance provides against losses caused by fire, lightning and removed of property from premises endangered by fire. The insured pays an amount regularly to the insurer who will indemnify the insured in the event of damage or losses caused by fire; it covers other perils such as explosion, riot, strike, terrorism, natural disasters etc.
5. Burglary/robbery/theft insurance: This policy covers the insured against loss of property due to burglary/robbery/theft. An insurance company undertakes to compensate the insured in the event of burglary/robbery/theft. Burglary has to do with forcefully entering into the building to steal. Robbery is the act of forcefully taking a valuable from someone. Theft is similar to burglary except that the perpetrator does not enter the building illegally.
6. Accident insurance: This is a policy that provides indemnity against hazards or injuries to person or group of persons. Accident insurance can cover personal accidents for a particular journey for a transport company. In some industries where hazard occurrences are high, It is compulsory for employers to take a group accident insurance policy for their employees. Group accident insurance is also common in team sport. Accident insurance covers for sickness and even accident against properties such as building, equipment, machinery etc that may be dangerous to lives and industries.

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