WAEC Past Questions and Answers - Page 2466

Methods Of Providing Indemnity To Insurance Contract :

There are various ways through which indemnity may be provided. These are :

1. Cash Payment: This is the usual way of making payment of a claim. This method is simpler, easier and less cumbersome.
2. Repair: This is also another way of providing compensation. Rather than making cash payment, the insurers will get the loss repaired to pre-loss condition as far as practicable.
3. Replacement: Usually in case of total loss the insurers may replace the subject-matter by another one of the same standard, age and quality. A glass would normally be replaced than repaired.

1. Reinstatement: The insurers may also reinstate the property by option. This is usually considered with regard to buildings damaged or destroyed by fire. Usually it is the option of the insurers to decide any one of the above four methods.

Reinsurance is also known as insurance for insurers or stop-loss insurance.Reinsurance is the practice whereby insurers transfer portions of their risk portfolios to other parties by some form of agreement to reduce the likelihood of paying a large obligation resulting from an insurance claim.

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