(a) Distinguish between the following set of terms:
i) “Reinsurance and Double insurance”.
ii) “Insurance and Assurance”.
(b) Explain four categories of insurance covers.
Difference between reinsurance and double insurance
Whereas reinsurance refers to the spread of risk among insurance companies, wherean insurance company that finds that it has entered into a contract which is a very expensive proposition, relieves itself insuring part or whole of the subject matter with another insurer.
Double insurance arises when a person effects more than one insurance with different insurers on the same risk and interest, and the sums assured exceed the value of the property insured.
Difference between insurance and assurance
Whereas insurance is generally a contract of indemnify against a contingency.
The Insurer assumes the risk of the contingency in payment of a premium, so that the insured, who suffers the damage, will be compensated from a common insurance fund.
Assurance is a contract which guarantees payment of a sum on the happening of a specified event which must happen sooner or later.
Categories of insurance covers:
This is a contract wherethe insurer, in consideration of payment of premium undertakes to pay to the person for whose benefit the insurance is made a certain sum of money or annuity or death of the person whose life is insured.
This is a contract which the insurer or underwriter undertakes to indemnify the other against any loss or damage caused to the property insured in the event of fire.
This is a contract wherethe insurer undertakes to indemnify the insured against loss arising from certain perils and sea-risks.
Burglary insurance is a contract to indemnify the insured against loss arising from burglary
Motor vehicle insurance