ccmd notes for insurance

• What are insurable risks?

  Risks that can be covered by insurance policies, such as property damage and personal injury.
• Why can insurable risks be planned for financially?

  Because they are typically unforeseen but measurable.
• What are non-insurable risks?

  Risks that include war, climate change, and illegal acts.
• Why are non-insurable risks often not covered by insurance?

  They are considered too large or unpredictable to be financially covered.
• What is the primary function of insurance?

  To provide coverage for financial loss due to unforeseen events.
• How does assurance differ from insurance?

  Assurance provides financial protection against events that are certain to happen.
• What is long-term insurance designed for?

  To provide coverage for an extended period, often years or decades.
• What is short-term insurance typically used for?

  To cover temporary needs, such as travel insurance.
• What are the types of compulsory insurance?

  1. Unemployment Insurance Fund (UIF)
  2. COIDA
  3. Road Accident Fund (RAF)
• What are the types of non-compulsory insurance?

  1. Fire Insurance
  2. Business Insurance
  3. Household Insurance
• What does fully comprehensive vehicle insurance cover?

  Both the insured's and third-party's damages in accidents, theft, and fire.
• What does fidelity insurance protect against?

  Financial losses due to employee dishonesty, such as theft or fraud.
• What is the principle of absolute good faith in insurance contracts?

  It requires full disclosure of all relevant information affecting the risk.
• What is insurable interest?

  It proves a financial loss will be suffered by the insured if the covered event occurs.
• What does contractual capacity ensure in an insurance contract?

  That the individual has the legal age and mental capacity to enter into the contract.
• What is indemnification in insurance?

  It aims to restore the insured to their original financial position prior to the loss.
• How is indemnification applied in short-term insurance?

  It compensates for physical or tangible losses.
• What are the roles of assurance in financial security?

  • Retirement planning
  • Family protection
  • Healthcare coverage
• What is excess in insurance?

  The amount the insured is responsible for paying out-of-pocket when a claim is made.
• How does low excess affect premiums?

  It results in high premiums.
• How does high excess affect premiums?

  It results in lower premiums.
• What is the role of proximate cause in insurance claims?

  It determines the validity of a claim by ensuring the loss is a direct result of an insured event.
• What does subrogation prevent in insurance?

  It prevents the insured from profiting from a loss by claiming compensation from both the insurer and the party at fault.
• What is the principle of "one loss, one claim" in insurance?


  Each loss is compensated for once, maintaining fairness in the insurance process.
• What does cession of insurance policies allow?

  It allows an insurance policy to be transferred to a creditor as security for a loan.
• What are the advantages of insurance?

  • Risk transfer
  • Financial stability
  • Rewarding caution
• What are the disadvantages of insurance?

  • Cost considerations
  • Coverage limitations
  • Fraud impact
• What are the advantages of assurance?

  • Long-term financial security
  • Coverage for major life events
• What are the disadvantages of assurance?

  • Potential financial burden
  • Risk of over-insurance