Letter Correspondence with Insurance Companies
One of the largest sectors of modern business is insurance. It is, by definition, an agreement that, in return for regular small payments, a company will pay compensation for loss, damage, injury or death. The four main branches of this business are:
(a) Fire Insurance,
(b) Accident Insurance,
(C) Marine Insurance, and
(d) Life Assurance
There is no essential difference between the words ‘insurance’ and ‘assurance’, but it has become a sort of customary’ to use the word ‘assurance’ when referring to life policies. In all other types of insurance, the insurer has to pay only if loss or damage occurs. But in life insurance, there is definitely of payment. Everyone dies at some time. That is the reason why life insurance is often described as life ‘assurance’.
(a) Fire Insurance: Fire insurance usually covers loss by fire of domestic or business premises and their contents. A policy taken to cover such loss is often extended to what are termed ‘special perils’ as, for example, hurricanes, earthquakes, tornadoes, floods and civil riots. Linked to: this kind of policy is consequential loss insurance which enables a company to receive payment in lieu of earnings while the repair of damage and rebuilding is in progress.
(b) Accident Insurance: General accident insurance is becoming popular with perils inherent in modern living. Car, rail and air accidents are possibilities. Most industrial and commercial concerns are required to ensure their staff against industrial injury on the business premises. A relatively new area of insurance is ‘product liability where a company can be held responsible for any injury or damage caused by one of its products.
(c) Marine Insurance: Marine insurance usually covers the ship itself and the catalog, m wen and passengers, as well as owner liabilities. It covers loss by storm, fire, collision or other perils on the sea, but not such mishaps as oil escaping from a tanker into the sea.
(d) Life Assurance/Insurance: Life assurance is the most popular form of insurance. It enables a person to guarantee an income to his family in the event of his early death. If he lives the normal span of years, it enables him to save for his retirement.
Insurance confers immense benefits on the insured who are relieved of a great deal of worry on payment of a small premium. It removes, to a large extent, the element of uncertainty from business life and allows businessmen to take commercial risks that they might not otherwise take. This leads to a higher level of business activity. On the basis of the regular sums of money from a large number of individuals and businesses, the insurance companies are able to invest in new developments in the industry.