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Basics of Insurance - Risk Management and Insurance, Principles of Insurance Video Lecture | Principles of Insurance - B Com

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FAQs on Basics of Insurance - Risk Management and Insurance, Principles of Insurance Video Lecture - Principles of Insurance - B Com

1. What is risk management and how does it relate to insurance?
Ans. Risk management is the process of identifying, assessing, and prioritizing potential risks and implementing strategies to minimize or mitigate those risks. Insurance is one of the strategies used in risk management, where individuals or businesses transfer the financial burden of certain risks to an insurance company in exchange for a premium payment. Insurance helps protect against unforeseen events and provides financial compensation in case of loss or damage.
2. What are the principles of insurance?
Ans. The principles of insurance are the fundamental guidelines that govern the functioning of insurance contracts. These principles include: 1. Principle of Utmost Good Faith: Both the insurer and insured must disclose all relevant information honestly and completely. 2. Principle of Insurable Interest: The insured must have a financial interest in the subject matter of the insurance policy. 3. Principle of Indemnity: Insurance aims to compensate for the actual loss suffered, not to provide a profit. The insured should not be in a better financial position after a claim than before the loss. 4. Principle of Contribution: If the same subject matter is insured with multiple insurers, they share the cost of the claim in proportion to their liability. 5. Principle of Subrogation: When the insurer compensates the insured for a loss, the insurer has the right to take legal action against the third party responsible for the loss.
3. What are the basic types of insurance coverage?
Ans. The basic types of insurance coverage include: 1. Life Insurance: Provides financial protection to the beneficiary in the event of the insured person's death. 2. Health Insurance: Covers medical expenses and provides financial protection against healthcare costs. 3. Property Insurance: Protects against damage or loss of property, such as homes, buildings, or personal belongings. 4. Auto Insurance: Provides coverage for damages or injuries resulting from accidents involving automobiles. 5. Liability Insurance: Protects against legal liabilities arising from injuries or damages caused to others.
4. How are insurance premiums determined?
Ans. Insurance premiums are determined based on several factors, including: 1. Risk Factors: Insurers assess the risk associated with the insured individual or property. Factors such as age, health condition, occupation, driving history, and location are taken into account. 2. Coverage Type and Limits: The extent of coverage and policy limits chosen by the insured affect the premium amount. Higher coverage or lower deductibles usually result in higher premiums. 3. Claim History: Insurers consider the insured's previous claims history to assess the likelihood of future claims. Individuals with a history of frequent claims may face higher premiums. 4. Insurance Company's Underwriting Policies: Each insurance company has its own underwriting policies, which may include factors specific to their risk assessment methods and business strategies.
5. What is the role of an insurance agent or broker?
Ans. Insurance agents or brokers act as intermediaries between the insured individuals or businesses and the insurance companies. Their role includes: 1. Assessing Insurance Needs: Agents or brokers help individuals or businesses assess their insurance needs and determine appropriate coverage options. 2. Providing Advice: They provide expert advice on different insurance policies, explaining the terms, conditions, and coverage details to help clients make informed decisions. 3. Policy Placement: Agents or brokers assist in placing insurance policies with suitable insurance companies that provide the desired coverage at competitive premiums. 4. Claims Assistance: They assist clients in filing insurance claims, ensuring the necessary documentation is submitted, and guiding them through the claims settlement process. 5. Ongoing Support: Agents or brokers offer ongoing support, including policy renewals, policy modifications, and addressing any queries or concerns that arise during the insurance coverage period.
49 videos|51 docs|14 tests
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