Activity

Good morning grade 12s

Please kindly be advised that we will be looking at investment Insurance. The important objectives from this chapter include:
● Being able to give the meaning of non-compulsory
● outline the meaning of four insurance concepts which include differences, and examples- insurable and non insurable risk, four principles of insurance
●advantages of insurance for businesses

MEANING OF NON-COMPULSORY INSURANCE
Non-Compulsory insurance
– Is insurance that an individual can take out Voluntarily. The insured has a choice of wheather to take it out or not to take it out.
– there is a insurance contract in which the insured will/might enter with an insurance company that will be represented by an insurance broker.

-monthly/annual premiums are paid to enjoy coverage for a specific risk.

– these types of risks are insurable nd are known as insurable risks.

– businesses are compensated for losses/damage resulting from specific risks.

-example of non-compulsory insurance with insurable risks include the following:
RISK
° FIRE INSURANCE
° THEFT INSURANCE
° VEHICLE INSURANCE
° STORM DAMAGE INSURANCE
° FIDELITY INSURANCE
° Cash-in-transit
° PUBLIC LIABILITY INSURANCE
° STOCK INSURANCE

What are Non-insurable risks
– there are not insured by the insurance companies. These are risks where the insurer cannot determine the probability of the risk and therefore cannot calculate the premium.

EXAMLES include:
• losses suffered because of war
• risks occurring in the period between the ordering and receipt of goods
• changes in fashion trends
• losses due to Marketing malpractices
• advancements in technology

NB :The ADVANTAGES of Insurance for businesses

– insurance transfers the risk from the business( insured) to an insurance company (insurer)

– baring in mind the transfer of the risk is subject to the terms and conditions of the insurance contract.

– insurance protects the business against theft and loss of stock and/or damages caused by natural disaster such as floods, storm damage etc.

– the business is compensated for insurable losses e.g destruction of property through fire.

– business assets include vehicles/equipment/building which need to be insured against damage and/or theft.

– T he business is protected against the loss of earnings
E.g in the case of a business being partly destroyed by a fire,an income cannot be earned for the period the business must close to repair the building.

– it protects the business against deeds of dishonesty by employees.

– insurance can be taken against the lives of partners in a partnership.

– replacement costs for damaged machinery and equipment are very high, therefore, insurance can reduce or cover these costs.

PLEASE ALSO GRADE 12S MAKE REFERENCE TO YOUR STUDY PACKS.

these notes are to be taken down into your note books and you put todays date the 7 of July 2021.

Ypu are also required to complete the activities from the notes give on your last day at school.

You are to complete Question Two from the activities given.