Insurance WASSCE (SC), 2021

Question 3

Candidates were asked to list and explain five factors insurer must have considered in making offer.

Observation

 

Some of the responses expected from the candidates were:
           

  1. Sum insured: The sum insured is the maximum liability of an insurer in a policy

and therefore cannot be exceeded in any case of payment of indemnity.      
(ii)Deductible: This is the application of large excess whereby the insured undertakes to bear substantial part of the loss arising under the policy for a reduction in premium.

  1. Policy excess: This is the condition imposed in the policy requiring the insured to      compulsorily bear a first portion of a claim which is expressed as a percentage of the loss or in absolute financial terms so that he can be more cautious in the use of the property

(iv)Under Insurance: This occur where the insured deliberately insures the subject matter of insurance below or less than the value at risk and therefore penalized by the insurer through the application of average clause.
(v) Franchise: If a policy is subject to franchise, the insured will bear the cost of repairs if the liability is less than the a fixed sum, the insurer will be responsible for the full amount of the loss.
(vi) Limit: This is the maximum amount of claim that must be paid by the insurer per occurrence or aggregate