Modern insurance is a legal business contract of the type called Uberrimae fidei, literally meaning the contract of utmost good faith. It is a contract regarded as one of trust, requiring each party to the contract to exercise the duty of disclosure, without which both the insured and insurer may not have the agreement of the mind.
The insurers do not always know the material facts about the risks proposed for insurance. Therefore, proposal forms are usually completed by the proposers availing the insurers with information which they consider material about the proposed insurance. The proposal form serves as the basis of the contract if completed and signed by the proposer. Policy documents are in turn drafted for the insured serving as evidence of the insurance of the insurance contracts. Therefore, the policy contains the intention of the parties to the insurance contracts.
Non-life insurances (Indemnity Contracts).
Non-life insurances are insurances in which the amount
payable on the happening of an insured event is limited to the extent of the
insured’s financial loss subject to the sum insured. The common ones are
discussed below:
Fire insurance: Fire is not the literal fire everyone knows.
Some fire may be beneficial such as the fire used in iron refinery or by
goldsmith. Others may be destructive resulting in economic waste such as in
business premises/building engulfed by fire. According to Hall (1985:7/1) fire
implies the actual ignition of something which ought not to be on fire, and it
must be accidental or fortuitous as far as the insured is concerned.
Fire insurance covers the insured against loss by or
incidental to fire. Of course, the fire must be the property insured against
loss of or damage to, by accidental fire. Two main types of fire of insurance
contract exist: ordinary fire insurance cover and special perils insurance
cover.
The ordinary fire cover has two main sub-classes. One deal
with private or residential house and their contents and the other called
standard fire cover provides coverage for every other form of building and
structures including business premises and business property. The perils
insured against in the ordinary fire, lightning and explosion (provided it is
caused by gas or boilers used for domestic purpose).
The other type of fire policy is the special perils cover.
This type of fire cover extends insurance protection to include some of the
perils excluded from the ordinary or standard fire policy. Insurers may accept
the extension on certain condition and at an additional premium from the
insured.
Business interruption insurance.
Business interruption insurance is usually an additional
insurance protection secured by the prudent insured, protected against loss or
damage to property by accidental fire or special perils. It can be referred to
as loss of profit insurance or consequential loss insurance explaining the
import of the insurance. This insurance provides cover for the insured who as a
result of fire damage is denied of normal business profits or more still,
expected to incur some business expenses when the business is temporarily
disrupted by fire damage. It is an insurance cover against loss of productive
capacity or future earning power during the period of restoration after loss of
or damage of insured property, usually property for business purposes.
Motor insurance.
Motor insurance in the commonest type of insurance in
Nigeria, Nigeria insurance regulation (1977) stated that motor insurance is an
insurance against loss of or damages to or arising out of or in connection with
the use of motor vehicles including third party risks. The popularity of this
type of insurance hinges on its social necessity (that is the over-riding
social benefits of motor vehicles). However, losses arising out of their use
necessitated the statutory requirement of insurance on motor vehicle used on
high ways against injury to or death of third parties.
Types of motor insurance policies.
There are a number of different insurance policies under
motor vehicle insurance. The common covers obtainable in the Nigerian insurance
market are:
·
Act only: this type of cover specifically
provides insurance protection for the insured against bodily injury to, and
death of third parties including other road users, while, a vehicle is being
used on public roads or highways.
·
Third party liability only: this is the
commonest and the lost popular motor insurance cover in Nigeria. This insurance
cover provides indemnity for damage to third party property that is property
any other person not party to the said insurance contract and that provided by
Act Only.
·
Third party, fire and theft insurance: this type
of motor insurance cover is not common in the insurance industry, it
stipulates, in addition to third party liability only, cover for fire and or
theft loss or damage to the policyholder’s vehicle.
·
Comprehensive cover: comprehensive motor
insurance cover is the most extensive motor vehicle insurance protection. It
provides indemnity for the following.
1.
The cover as may be provided in the third party
fire and theft cover.
2.
Any accidental damage to the insured vehicle
including own damage and loss or damage by malicious acts like; elevator, road
or inland waterways.
3.
A limited cover for medical expenses incurred by
the insured, his driver or other passengers of the vehicle for injury sustained
as a result of accidents.
4.
And with an additional premium, cover is
extended to personal affects or accessories in the insured vehicle.
The general accident insurance: this represents a conglomeration of miscellaneous insurance, being insurances not falling under life insurance, fire insurance, motor vehicle insurance, marine and aviation insurance. The classification is rather made for simplicity and to ease description of the indemnity insurance. And secondly, to show the dynamism in insurance business, since many more insurance policies can be designed as soon as the needs are identified and ability acquired.
For
example, it should not sound strange if Nigerian insurers design and market
insurance policies such as rainfall, licenses, hairdressers, waste removal
contractors and launderettes insurances.
In conclusion, Insurance derives from the situations of
unforeseen or fortuitous events, at least in timing. That is to say, the insured
event must be accidental rather that willful. Thus, should insurance be
classified according to the nature of event on which the sum insured becomes
payable.