TYPES OF INSURANCE
There are various risks which a business should Insure against. These constitute the various types of insurance, namely:
- Bad debts.
- Goods in transit.
- Group insurance.
- Cash in transit.
- Fidelity guarantee.
- Export credit guarantee.
- Plate glass.
- Agricultural insurance.
- Burglary, theft, robbery.
- Consequential loss.
- Contractor all risk.
- Employer liability.
- Aviation insurance.
- Accident glass.
- Motor vehicle.
- Marine glass.
- Life assurance.
1) Bad Debts Insurance.
Bad debts are debts that are difficult to collect. Therefore, bad debts insurance covers debts that may not be paid by the debtors to the business. The risk of non-payment is the subject matter of this type of insurance. Here, the insurance company will guarantee to protect the business against irrecoverable debts.
2) Goods in Transit
Goods in transit insurance is a type of insurance which covers against accidental damage or loss to goods in transit. It provides compensation to the owner of goods if the goods are damaged or lost in transit. Goods sent by any means of transportation should be covered by this policy. Parcels, letters or luggages can also be insured under the policy.
3) Group Insurance
Group insurance is taken to cover a group of people or workers. These are policies on a collective basis, assuring members of a particular group such as a football team or a group of employees of a firm. The insurer is liable for every one covered by the single policy. It reduces the cost of administration and the dependants will benefit if the worker is involved in an accident. This policy also encourages employees to remain in employment.
4) Cash in Transit
Cash in transit policy provides compensation to the insured in the event of cash being stolen either from the business premises, home or while it is being carried to or from the bank. It covers cash taken outside to purchase goods and cash brought into the office for workers’ salaries. It may provide compensation to employees who may be injured during a robbery operation.
5) Fidelity Guarantee Insurance
Fidelity guarantee is a type of policy effected by an employer, insuring him against the possibility of the dishonesty of an employee. The object is to provide cover against loss by reason of dishonesty of people holding positions of trust. This is taken by a firm to guide against the risk or loss arising from misappropriation of money by the employees in charge of cash, e.g. cashier, accountants.
6) Export Credit Guarantee Insurance
The export credit guarantee insurance policy provides cover for exporters against the major risks of exporting. It guarantees to cover exporters of goods against the risk of bad debts as a result of goods sold to foreign buyers. Some uncertainties in international trade, like insolvency of buyers, action of some foreign governments, e.g. preventing performance of contract, trade restrictions, civil disturbances and exchange control difficulties are also covered by this policy.
Export credit guarantee insurance functions to:
- cover non-payment by the buyer,
- indemnify the exporter in the event of nonpayment and
- encourage sales of goods on credit in the international trade.
7) Glass Plate Insurance
The glass plate insurance policy covers accidental damage to glass plates, windows, doors and shelves. It guarantees to cover for the replacement of plate – glass windows in the event of damage, e.g. Etiebet’s Place (which is a glass house) on Mobolaji Bank Anthony Way in Ikeja, Lagos.
8) Agricultural Insurance
Agricultural insurance is the type of insurance which provides relief to farmers for losses suffered on their crops as a result of drought, pest and diseases.
9) Burglary, Theft and Robbery
The policy provides compensation for losses which may arise from goods or property stolen or damaged through breaking into a shop or business premises. An individual can also take this policy against the risk of losing his house property to thieves. As a matter of necessity, it must be proved that thieves have actually broken into the house and carted away the property under consideration.
10) Consequential Loss Insurance
Consequential loss policy covers losses to commercial firms after a fire incident, resulting in interruption of business activities and stoppage of production. It covers loss of profit arising from the stoppage of the production processes.
11) Contractor all Risk
The contractor all risk provides for contractors in the event of any damage being done to the construction work from a wide range of perils. The risk is that the project may sustain severe damage and this would delay the completion of the project.
12) Employers Liability Insurance
The intention of employer liability insurance policy is to ensure that the employer does not suffer financially but is compensated for any money he may have to pay in respect of a claim to provide compensation if any employee was injured or killed.
This policy provides cover for employers in the event of liability to employees arising from industrial fatality, disease or injury. It gives the employees some protection.
13) Aviation Insurance
All risks associated with the use of aircraft as a means of transport are covered by the aviation insurance policy. The component parts and complete jumbo jets are all insured in the aviation insurance market. The buyers are large commercial airlines, aircraft users and private owners. The policy also covers the aircraft and the liabilities to passengers.
14) Accident Insurance
Accident policy guarantees the payment of compensation in the event of an accident, causing death or injury. It covers protection for death or injury arising from accidental, violent, external and visible means. It can cover personal accident, sickness, etc.
15) Motor Vehicle Insurance
The motor vehicle insurance policy provides for liability for death or bodily injury to any person arising from the use of vehicles on the road. Compensation will be paid to victims injured in road accidents, i.e ., injury to the body.
The insurance companies base their premiums on the types of cover provided, the size, value of the vehicle etc. Most drivers have either third party insurance, third party fire and theft and comprehensive policies.
- The Third Party Fire and Theft: In addition to the cover already stated above it covers damages to the vehicle as a result of fire and theft. The policy holder will be compensated in the event of losses suffered from fire and theft of the vehicle.
- Comprehensive Insurance: This covers the driver, the insured vehicle, third parties and sometimes the contents of the insured vehicle. It covers virtually all accidental damages to the insured vehicle and losses arising from fire or theft.The comprehensive policy attracts high premiums.