Page 16 - Insurance Surveyors Book Ebook IC S01
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Survey And Loss Assessment IC-S01
supposing we want to insure each one of them, say for one thousand rupees, all are
need is only Rs.4000/- to pay as claim.
Thus we need to collect only 4 rupees from each member of the insurance
cooperative. The above is only an illustration to explain the mechanism as to how
insurance is only a system of pooling risks and resources.
What is insurance
Business of insurance is related to the protection of the economic value of the
assets.
An asset is valuable to the owner because he get some benefit from it.
No asset is expected to last forever.
An accident or some unfortunate external event may destroy the asset or make it
incapable of giving the desired benefits.
Insurance is a mechanism that helps to reduce the effects of such adverse
situations.
The event that may cause a loss is called a peril
The concept of insurance gives an assurance that the benefit will be protected.
Insurance covers only uncertain risks. If the occurrence can be known with
certainty insurance will not be possible
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