Insurance

Syllabus tag: KCSE | Business Studies | Form 2 | Topic 13 Insurance

Lesson objectives

By the end of this topic, you should be able to:

• Explain the theory of insurance and the pooling of risks.
• Define the terms used in insurance.
• Explain the principles of insurance and why each exists.
• Describe the classes of insurance and distinguish insurance from assurance.

Summary

Insurance transfers risk from an individual to a pool of many contributors, so that a loss falling on one is met from the contributions of all. Its principles all serve one purpose: ensuring the insured is restored, never enriched. Its two classes are general insurance, which indemnifies against loss, and life assurance, which pays on an event that is certain to happen.