Comprehensive Insurance Assignment for FNSR2101 Course

This assignment solution for an Introduction to Insurance course comprehensively addresses key concepts within the field. It begins by differentiating between insurable and non-insurable risks, providing examples such as property damage, genetic defects, and gambling losses. The solution then explores the societal benefits of insurance, including wealth protection, social harmony, and enhanced living standards. It delves into physical hazards, reinsurance benefits, and contract formation, analyzing scenarios involving advertising, vehicle ownership, and burglary insurance. The assignment further examines legal positions of insurers, mortgage clauses, policy cancellation, and the application of coinsurance formulas to determine loss payments, providing a thorough understanding of insurance principles and practices. References to relevant literature support the analysis.

Running Head: INSURANCE 1
INSURANCE

Running Head: INSURANCE
Table of Contents
Question 1...................................................................................................................................................3
Question 2...................................................................................................................................................4
Protects the wealth of society..................................................................................................................4
Eliminates the social evil.........................................................................................................................4
Helps in enhancing the standard of living................................................................................................4
The benefits also accounts for the social security benefits.......................................................................5
Equitable distribution of loss...................................................................................................................5
Question 3...............................................................................................................................................5
Question 4...............................................................................................................................................5
PART II.......................................................................................................................................................6
Question 5...............................................................................................................................................6
Question 6...............................................................................................................................................6
Question 7...............................................................................................................................................6
Question 8...............................................................................................................................................7
Part III.........................................................................................................................................................7
Question 9...............................................................................................................................................7
Question 10.............................................................................................................................................7
Question 11.................................................................................................................................................8
References...................................................................................................................................................9

Running Head: INSURANCE
Question 1
A
Rusting of an unprotected structure can be considered as the insurable risk as the damage
to the property can be insured and it also falls down in the parameters of the insurance company.
The property can be insured up to the amount of the loss (Zuo & Hang, 2018).
B
A genetic defect affects 9 of 10 new born males in a family can be cured and cannot be
cured. The insurance companies generally take the decisions on the basis of the level of the risk
associated with the disease can be cured or not. Hence, some considers it as a insurable risk, only
to the extent of the preliminary stage (Andrews, 2015).
C
Developing a cancer can be insured but only to a particular stage. It has been observed in
many policies that the organs are covered by the insurance policy, even the payment of the
dialysis can be made, however the payment for the cancer will be made only when the tumor
reflects the uncontrolled growth. The future premiums are not waived. Hence, it is considered as
non-insurable risk (Soni, Sabik, Simon & Sommers, 2018).
D
Eventual obsolescence of a personal computer can be insured under the Oriental
Insurance company limited. The electronic equipment is insured and protects the Owner, Lessor

Running Head: INSURANCE
and hirer. The computer and the allied peripherals and the other auxiliary equipment are also
insured.
E
Losing money at Casino comes under the activity of the gambling. Gambling process is
purely based on the luck factor and the calculative instincts. The company cannot insure an
individual just on the basis of the loss incurred while gambling and speculation. Hence, it is not
an insurable risk.
Question 2
The five benefits of the insurance to the society are discussed in detail to have an in-depth
understanding.
Protects the wealth of society
The major benefit of the insurance is that it provides the safety and the security to the
individuals and the members of the society. For example the life insurance that offers the
protection against the wealth.
Eliminates the social evil
There are different forms of the insurance, and the major focus is on the elimination of
the evils. When the social evil is solved there will be more harmony and peace. The social
aspects play vital roles in the overall development of the society and hence, it is also considered
as one of the major benefits.

Running Head: INSURANCE
Helps in enhancing the standard of living
The insurance helps in the enhancement of the standard of the living. The high returns
are available to the insurers that lower the ideals of the communities.
The benefits also accounts for the social security benefits
Insurance plays a vital role in the fulfilling the certain needs for which the state might
have to provide. The social benefits for the old age, sickness and disability are the general gains
that are being accounted (Casaburi & Willis, 2018).
Equitable distribution of loss
Insurance also helps in the distribution of the costs in the parallel manner. In the absence
of the insurance it becomes difficult in the haphazard manner. The basic problem occurs when
the amount is included in the higher rent than others (ELECTRONIC EQUIPMENT
INSURANCE (EEI), 2018).
Question 3
The physical hazard is an agent, which can cause with or without harm. They can be
classified as the type of occasional hazard or the environmental hazard (Alberta Health, 2018).
The examples of the physical hazard are lighting conditions, working with high voltage
equipment, working at heights, overhead hazards, fast moving equipment, temperature extremes,
blocked walkaways and exposure to the electromagnetic fields (Dixon, Christensen & Duncan,
2018).
Question 4
The two major benefits that are listed in this assignment are to increase the capacity to write the
business whereas to maintain a reserve of liability balance.

Running Head: INSURANCE
Since reinsurance expands the guaranteeing limit of an essential guarantor, the essential back up
plan can sell approaches that typically it would not acknowledge in light of the fact that as far as
possible is over the safety net provider's maintenance limit it increases the capacity of the
insurer. In the second situation when the policy is being sold by the insurer as stipulated by the
unearned part of the premium is transferred to the reserve or the liability account and the same
cannot be used for paying the expenses.
PART II
Question 5
The contract has not been formed with the Brown’s acceptance as the essentials of the
valid contract are mot formed by Brown. The ad has been running for ten days yet the acceptance
has not been received from the John Smith. Generally the, advertisements are treated as the
invitation to treat. Hence, the contract is not a valid contract (Smits, 2017).
Question 6
According to the rule of the ownership and the operation of the vehicle it’s mandatory for
the operating and the owner of the vehicle. The right fact and the information of were not
delivered by the client and at the same time the broker also violated the concept of the due
diligence. Hence, the liability is on the part of both the owners and the clients as well. Hence,
these are the issues that have been accounted for (Hoffman & Eigen, 2017).
Question 7
In case of the Burglary insurance the protection is provided against damage caused by the
burglary. In the current scenario Mr. White’s store must have been covered by the alarm from the

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protection and ABV will not honor the claim as it was the main requirement. Protection is the
necessity, more than the requirement hence, coverage is not available.
Question 8
The legal position of the insurer is to advice the client about the conditions that are covered
within the purchase of the vehicle. The staff adjuster must have informed before the repairs have
been done on the vehicle. The policy shall be properly read by the client and is the loss could not
have been covered it should have been mentioned clearly. Hence the insurer must distribute the
liability legally between the staff adjuster and the owner of the vehicle (Smits, 2017).
Part III
Question 9
Mortgagee is the lender in the process of the mortgage. This could be the bank, building
society, savings and association of the loan. The provision and the conditions included in the
clause of the mortgage is the transfer of the interest in a specific immovable property, for
securing the funds in the advance through the way of loan. The sections governing the Mortgage
are 54 to 104 of the Transfer of the property Act, 1882. The different types of the mortgage are
also provided in the sections which are simple mortgage, mortgage by conditional sale,
usufructuary mortgage, and equitable mortgage. There is no provision in the mortgage that can
be used to prevent or cease the redemption (Gay, ET AL 2015).
Question 10
The first named insured has the right to cancel the policy at any time via mail or
delivering the written notice to the insurer. The condition is such that the notice must be
provided "in advance." This means that if the owner wishes to make the cancellation on a

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specified date, the notification shall be provided to the insurer before the date. The termination is
invalid as the cancellation has been done whereas the mail has been sent later on (Arena, Myers
& Kaminsky, 2016).
Question 11
Building replacement value 3000000
Coinsurance 90%
Amount of the insurance 2250000
Amount of the loss 600000
Actual amount of the insurance 2700000
Coinsurance Value of Loss * Amount of the Carried
Insurance
Amount of the required insurance
Value of the coinsurance 500000
In this particular situation the owner absorbs the $500000 co insurance penalty since they
retained around the two third of the risk. The owner also absorbs the one fourth of the loss.

Running Head: INSURANCE
References
Alberta Health, (2018). Examples of Common Workplace Hazards. Retrieved from
https://work.alberta.ca/elearning/healthcare/pdf/ExamplesCommonWorkplaceHazardsAH
S.pdf
Andrews, N. (2015). Contract law. Cambridge University Press. California.
Arena, R., Myers, J., & Kaminsky, L. A. (2016). Revisiting age-predicted maximal heart rate:
Can it be used as a valid measure of effort?. American heart journal, 173, 49-56.
Casaburi, L., & Willis, J. (2018). Time versus state in insurance: Experimental evidence from
contract farming in Kenya. American Economic Review, 108(12), 3778-3813.
Dixon, W., Christensen, S., & Duncan, W. (2018). Mortgagee sales, disclaimer and escheat: A
suggested statuory solution. Insolvency Law Journal, 26(Pt 2), 61-72.
ELECTRONIC EQUIPMENT INSURANCE (EEI), (2018). THE ORIENTAL INSURANCE
COMPANY LIMITED. Retrieved from https://orientalinsurance.org.in/electronic-
equipment-insuarance-policy
Gay, C. E., Christensen, S. T., Hayward, G., Cielocha, S., & Binion, T. (2015). U.S. Patent No.
9,105,066. Washington, DC: U.S. Patent and Trademark Office.
Hoffman, D. A., & Eigen, Z. J. (2017). Contract Consideration and Behavior. Geo. Wash. L.
Rev., 85, 351.
Smits, J. M. (Ed.). (2017). Contract law: a comparative introduction. Edward Elgar Publishing.
Soni, A., Sabik, L. M., Simon, K., & Sommers, B. D. (2018). Changes in insurance coverage
among cancer patients under the Affordable Care Act. JAMA oncology, 4(1), 122-124.
Zuo, Z., & Hang, Y. (2018). The Research on the Insurable of Catastrophe Risk based on the
Theory of Insurable Risk. Foreign Economic Relations & Trade, (4), 29.