Insurance
What is Insurance?
History of Insurance.
History of First Insurance.
Types of Insurance.
Insurance is a co-operative device to spread the loss caused by a particular risk over a number of people, who are exposed to it & who agree to insurance themselves against the risk.
The first methods of transferring or distributing risk in a monetary economy, were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, The first written insurance policy appeared in ancient times on a Babylonian obelisk monument with the code of King Hammurabi carved into it. The "Hammurabi Code" was one of the first forms of written laws. These ancient laws were extreme in most respects, but it offered basic insurance in that a debtor didn't have to pay back his loans if some personal catastrophe made it impossible (disability, death, flooding, etc.).
2. Property Insurance: If you own your building or have business personal property, including office equipment, computers, inventory or tools you should consider purchasing a policy that will protect you if you have a fire, vandalism, theft, smoke damage etc. You may also want to consider business interruption/loss of earning insurance as part of the policy to protect your earnings if the business is unable to operate.
3. Business owner’s policy (BOP): A business owner policy packages all required coverage a business owner would need. Often, BOP’s will include business interruption insurance, property insurance, vehicle coverage, liability insurance, and crime insurance . Based on your company’s specific needs, you can alter what is included in a BOP. Typically, a business owner will save money by choosing a BOP because the bundle of services often costs less than the total cost of all the individual coverage’s.
4. Professional Liability Insurance:This type of insurance is also known as Errors and Omissions Insurance. The policy provides defense and damages for failure to or improperly rendering professional services. Your general liability policy does not provide this protection, so it is important to understand the difference. Professional liability insurance is applicable for any professional firm including lawyers, accountants, consultants, notaries, real estate agents, insurance agents, hair salons and technology providers to name a few.
6. Automobile insurance:Automobile insurance is probably the most common form of insurance and may cover both legal liability claims against the driver and loss of or damage to the insured's vehicle itself. This insurance is extended over cars, commercial vehicles, caravans and trailers, as well as motorcycles.
7. Health insurance:Health insurance policies will often cover the cost (or part thereof) of an individual and his/her dependants’ medical costs.
8. Marine insurance: Marine insurance and marine cargo insurance cover the loss or damage of ships at sea or on inland waterways, and of the cargo that may be on them. When the owner of the cargo and the carrier are separate entities, marine cargo insurance typically compensates the owner of cargo for losses sustained from fire, shipwreck, etc., but excludes losses that can be recovered from the carrier or the carrier's insurance.
An insurance policy is a contract which outlines an insurer’s obligations to a premium-paying party, known as the policy holder. There are a great many different types of insurance, with health insurance, automobile insurance, life insurance, and homeowner’s insurance among the most common. No matter the type of insurance, an insurance policy usually consists of six sections: declarations, definitions, lists of covered items, exclusions, conditions, and endorsements
A cover note is a temporary insurance's certificate that is issued by the Insurer before the issuance of a policy after the Insured has given a duly filled in proposal form and has paid the premium in full. This note is valid for a period of 60 days from the date of issue of the cover note and the Insurer shall issue the Insurance certificate before the cover note expires.
An insurance premium is the amount of money charged by a company for active coverage. The sum a person pays in premiums, also referred to as the rate, is determined by several factors, including age, health, and the area a person lives in. People pay these rates annually or in smaller payments over the course of the year, and the amount can change over time. When insurance premiums are not paid, the policy is typically considered void and companies will not honor claims against it.
History of Insurance.
History of First Insurance.
Types of Insurance.
Insurance Policy
Cover Note of Insurance
Insurance Premium
Insurance is a special type of contract between an insurance company and its client in which the
Cover Note of Insurance
Insurance Premium
Insurance
Insurance is a special type of contract between an insurance company and its client in which the
insurance company agrees that on the happening of certain events the insurance company will either make payment to its client or meet certain costs. The reason we call an insurance policy a special type of contract is because there are certain characteristics that relate to an insurance policy that do not relate to most other contracts. In particular, an insurance policy is a contract of “utmost good faith”. This means that the insurance company and the insured person have certain very important obligations that do not exist in normal contracts. These include the duty of disclosure and the duty not to make any false statements in relation to a claim.
According to Mowbray and Blanchard “Insurance is promise by an insure to uninsured of protection and or service. “
F.G. Grare says, “ Insurance may be defined as a system combining any loss exposure, with the cost of the losses being shared by all of the participants.”
Reigeland and miller says, “ Insurance a social device wherby the uncertain risk of individual may be combined in a group and thus made more certain small peridie contribution by the individuals providing a fund out of which those who suffer losses may be reimbursed.
For example, in a car insurance policy, the insurance company agrees that if the car is damaged, the insurance company will pay the cost of repairing it. Under an income protection policy, the insurance company agrees that if its client is unable to work, the insurance company will pay its client an agreed amount.
Insurance may be defined as a consisting one party (the insurer) agrees to pay to the other party (the insured) or his beneficiary, a certain sum upon a given contingency (the risk) against which insurance is sought.
Functional definition
Insurance is a co-operative device to spread the loss caused by a particular risk over a number of people, who are exposed to it & who agree to insurance themselves against the risk.
Contractual definition
Insurance has been defined to be that in which a sum of money as a premium is paid in consideration of the insurer’s incurring the risk of paying a large sum upon a given contingency.
History of Insurance
In some sense we can say that insurance dates back to early human society. We know of two types of economies in human societies: natural or non-monetary economies (using barterand trade with no centralized nor standardized set of financial instruments) and monetary economies (with markets, currency, financial instruments and so on). Insurance in the former case entails agreements of mutual aid. If one family's house gets destroyed, the neighbours are committed to help rebuild it. Granaries embodied another early form of insurance to indemnify against famines. These types of insurance have survived to the present day in countries or areas where a modern money economy with its financial instruments is not widespread.[citation needed]
The first methods of transferring or distributing risk in a monetary economy, were practiced by Chinese and Babylonian traders as long ago as the 3rdand 2nd millenniaBC, respectively.[1]Chinese merchants travelling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel's capsizing. The Babylonians developed a system which was recorded in the famous Code of Hammurabi, c. 1750 BC, and practiced by early Mediterraneansailing merchants. If a merchant received a loan to fund his shipment, he would pay the lender an additional sum in exchange for the lender's guarantee to cancel the loan should the shipment be stolen or lost at sea.
Merchants have sought methods to minimize risks since early times. Pictured, Governors of the Wine Merchant's Guild by Ferdinand Bol, c. 1680.
Achaemenian monarchs in Ancient Persia were presented with annual gifts from the various ethnic groups under their control. This would function as an early form of political insurance, and officially bound the Persian monarch to protect the group from harm.[2]
At some point in the 1st millenium BC, the inhabitants of Rhodes created the 'general average'. This allowed groups of merchants to pay to insure their goods being shipped together. The collected premiums would be used to reimburse any merchant whose goods were jettisoned during transport, whether to storm or sinkage.[3]
The ancient Athenian "maritime loan" advanced money for voyages with repayment being cancelled if the ship was lost. In the 4th century BC, rates for the loans differed according to safe or dangerous times of year, implying an intuitive pricing of risk with an effect similar to insurance.[4]
The Greeks and Romansintroduced the origins of health and life insurance c. 600 BC when they created guilds called "benevolent societies" which cared for the families of deceased members, as well as paying funeral expenses of members. Guildsin the Middle Ages served a similar purpose. The Jewish Talmud also deals with several aspects of insuring goods. Before insurance was established in the late 17th century, "friendly societies" existed in England, in which people donated amounts of money to a general sum that could be used for emergencies.
History of First Insurance
The first methods of transferring or distributing risk in a monetary economy, were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, The first written insurance policy appeared in ancient times on a Babylonian obelisk monument with the code of King Hammurabi carved into it. The "Hammurabi Code" was one of the first forms of written laws. These ancient laws were extreme in most respects, but it offered basic insurance in that a debtor didn't have to pay back his loans if some personal catastrophe made it impossible (disability, death, flooding, etc.).
The Greeks and Romans introduced the origins of health and life insurance to us around 600 AD, when they organized guilds / benevolent societies (such as sodalities, collegia and military societies) which afforded members certain benefits, such as proper burial rites, or a financial contribution towards burial costs (fanaticism) or traveling expenses of members of the army. In exchange for this benefit, members of the society made regular contributions to it. The earliest identifiable class of insurance as a business was marine insurance. Early forms of modern marine policies have been traced back as far as the Italian city states of Genoa and Palermo in the 13th century. According to contemporary sources, marine insurance was available in France, Spain, Italy, Flanders and England by 1500, and early forms of marine policies are found in the records of the High Court of the Admiralty of England from 1547.
Although pre-dated by marine business, fire insurance was the first to achieve corporate status. Municipal or state-funded fire insurance originated in Germany in 1623, with the establishment of the Great Werder Fire Fund in Prussia, but the first fire insurance companies were established in England. Around 1681, the Fire Office was established in London by Dr Nicholas Barbon, followed by the Friendly Society in 1683 and the Hand-in-Hand Fire & Life Insurance Society (also known as the Contributors for insuring houses, chambers, or rooms, from loss by fire by amicable contribution) in 1720.
Policies offering insurance on lives were available from the late 16th century. The earliest recorded example in the UK dates from 1588 but, in other countries, such as the Netherlands and France, insurance of lives was prohibited until much later. Life assurance as a corporate business did not really develop until 1699 with the establishment in England of the Society of Assurance for Widows and Orphans, followed a year later by the Second Society of Assurance for Widows and Orphans, followed in 1706 by the Amicable Society.
The first insurance company in the United States underwrote fire insurance and was formed in Charles-Town (modern-day Charleston), South Carolina, in 1732. The insurance companies had a rude awakening in 1835 when the New York fire struck. The losses were unexpectedly high and they had no reserves prepared for such a situation. As a result of this, Massachusetts leads the states in 1837 by passing a law that required insurance companies to maintain such reserves. The great Chicago fire in 1871 reiterated the need for these reserves, especially in large, dense cities.
In India, insurance has a deep-rooted history. It finds mention in the writings of Manu ( Manusmrithi ), Yagnavalkya ( Dharmasastra ) and Kautilya ( Arthasastra ). The writings talk in terms of pooling of resources that could be re-distributed in times of calamities such as fire, floods, epidemics and famine. 1818 saw the advent of life insurance business in India with the establishment of the Oriental Life Insurance Company in Calcutta. This Company however failed in 1834. In 1829, the Madras Equitable had begun transacting life insurance business in the Madras Presidency. 1870 saw the enactment of the British Insurance Act and in the last three decades of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started in the Bombay Residency. In 1914, the Government of India started publishing returns of Insurance Companies in India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life business. In 1928, the Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non-life business transacted in India by Indian and foreign insurers including provident insurance societies. In 1938, with a view to protecting the interest of the Insurance public, the earlier legislation was consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for effective control over the activities of insurers. The history of general insurance datesback to the Industrial Revolution in the west and the consequent growth of sea-faring trade and commerce in the 17th century. It came to India as a legacy of British occupation. General Insurance in India has its roots in the establishment of Triton Insurance Company Ltd., in the year 1850 in Calcutta by the British. In 1907, the Indian Mercantile Insurance Ltd, was set up.
Types of Insurance
1. General Liability Insurance: Every business, even if home-based, needs to have liability insurance. The policy provides both defense and damages if you, your employees or your products or services cause or are alleged to have caused Bodily Injury or Property Damage to a third party.
2. Property Insurance: If you own your building or have business personal property, including office equipment, computers, inventory or tools you should consider purchasing a policy that will protect you if you have a fire, vandalism, theft, smoke damage etc. You may also want to consider business interruption/loss of earning insurance as part of the policy to protect your earnings if the business is unable to operate.
3. Business owner’s policy (BOP): A business owner policy packages all required coverage a business owner would need. Often, BOP’s will include business interruption insurance, property insurance, vehicle coverage, liability insurance, and crime insurance . Based on your company’s specific needs, you can alter what is included in a BOP. Typically, a business owner will save money by choosing a BOP because the bundle of services often costs less than the total cost of all the individual coverage’s.
4. Professional Liability Insurance:This type of insurance is also known as Errors and Omissions Insurance. The policy provides defense and damages for failure to or improperly rendering professional services. Your general liability policy does not provide this protection, so it is important to understand the difference. Professional liability insurance is applicable for any professional firm including lawyers, accountants, consultants, notaries, real estate agents, insurance agents, hair salons and technology providers to name a few.
5. Life Insurance: Life insurance protects an individual against death. If you have life insurance, the insurer pays a certain amount of money to a beneficiary upon your death. You pay a premium in exchange for the payment of benefits to the beneficiary. This type of insurance is very important because it allows for peace of mind. Having life insurance allows you to know that your loved ones will not be burdened financially upon your death.
6. Automobile insurance:Automobile insurance is probably the most common form of insurance and may cover both legal liability claims against the driver and loss of or damage to the insured's vehicle itself. This insurance is extended over cars, commercial vehicles, caravans and trailers, as well as motorcycles.
7. Health insurance:Health insurance policies will often cover the cost (or part thereof) of an individual and his/her dependants’ medical costs.
8. Marine insurance: Marine insurance and marine cargo insurance cover the loss or damage of ships at sea or on inland waterways, and of the cargo that may be on them. When the owner of the cargo and the carrier are separate entities, marine cargo insurance typically compensates the owner of cargo for losses sustained from fire, shipwreck, etc., but excludes losses that can be recovered from the carrier or the carrier's insurance.
Insurance Policy
An insurance policy is a contract which outlines an insurer’s obligations to a premium-paying party, known as the policy holder. There are a great many different types of insurance, with health insurance, automobile insurance, life insurance, and homeowner’s insurance among the most common. No matter the type of insurance, an insurance policy usually consists of six sections: declarations, definitions, lists of covered items, exclusions, conditions, and endorsements
Cover Note
A cover note is a temporary insurance's certificate that is issued by the Insurer before the issuance of a policy after the Insured has given a duly filled in proposal form and has paid the premium in full. This note is valid for a period of 60 days from the date of issue of the cover note and the Insurer shall issue the Insurance certificate before the cover note expires.
Insurance Premium
An insurance premium is the amount of money charged by a company for active coverage. The sum a person pays in premiums, also referred to as the rate, is determined by several factors, including age, health, and the area a person lives in. People pay these rates annually or in smaller payments over the course of the year, and the amount can change over time. When insurance premiums are not paid, the policy is typically considered void and companies will not honor claims against it.
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