Frequently Asked Questions

Question: If I buy comprehensive motor police, will all my losses be covered?
Answer:
  • Not all losses will be covered by a comprehensive policy.  Under comprehensive policy, you will be covered for claims made by Third Party or parties for deaths, bodily injuries and property damage caused by your vehicle.  You will also be covered for loss of or damage to your vehicle due to fire, theft or any accidental causes.  However, there are many exclusions.  You should check your policy for these exclusions.
  • You should also note that deaths and bodily injuries of the driver and passengers of your vehicles are not covered under your comprehensive cover.
Question: What are the Benefits of Insurance?
Answer:

The following are the benefits of insurance:-

  • Peace of Mind:- The knowledge that Insurance exists to meet the financial consequences of certain risks, provides a form of peace of mind.
  • Loss control:- Companies have developed considerable expertise in the Technology of different forms or loss control.
  • Social Benefits:- The fact that the owner of a business has the funds available to recover from loss stimulates the business activity, jobs are being maintained and goods or services can still be sold.  Thus people maintain their job and source of their income.
  • Investment of Funds:- Insurance companies have at their disposal, large amounts of money.  This arises due to the fact that there is a time gap between the receipt of premium and the payment of a claim.
Question: What is Risk Management?
Answer:

Risk management is the identification, analysis and economic control of those risks which can threaten the assets or earning capacity of an enterprise.

Question: When I made a claim to the insurance company of the vehicle that knocked into my vehicle, the company refused to pay my claim because its policy owner did not make any report. Why is this so?
Answer:

An insurance policy is a contract between the insurance company and the policy owner, if the policy owner fails to report to the insurance company about an accident, the insurance company will not be able to entertain the claim made by any third party as the company has no contract with the Third Party.
Therefore, the insurance company will only be responsible for handling your claim if its policy owner has requested it to step into his shoes for the loss/damage caused by him in the accident.

Question: Why should insurers buy reinsurance?
Answer:

The reasons are:-

  • Security
    One of the reasons for purchase of insurance was that the insured wanted to be relieved from the uncertainty of loss.  The insurance company seeks the same kind of security and peace of mind which is being achieved by purchasing reinsurance.
  •  Stability
    The insurer can avoid fluctuation in claims costs from year to year and within a year by the purchase of reinsurance.
  • Capacity
    The direct insurer purchase reinsurance in order to increase capacity it has to accept business.
  •   Catastrophes
    The direct insurer is not immune from the possibility of a complete catastrophe.  This could cause financial problems which the insurer would want to avoid.  Thus, it can transfer much of this risk to the reinsurer.
  •  Macro Benefits
    The cost of risk is spread around the market place and the world, and the impact of risk does not fall solely on one economy.