This is categorized into total loss and partial loss.

TOTAL LOSS: This occurs where the subject matter (goods) is completely destroyed.

This is further subdivided in:

  1. Actual Total Loss: This is a type of loss which occurs when the goods are completely destroyed by fire, when a ship sinks after colloid or when the goods have been affected by sea water such that they are no more fit for use.
  2. Constructive Total loss: This occurs where the object insured have to be abandoned because what is left is beyond repairs.

PARTIAL LOSS: This occurs when there is damage to a portion of ship or its cargo. It can also be categorized into:

  1. General Average loss: This is partial loss which occurs when the ship master, for the interest of the parties, deliberately and reasonably throws overboard or jettisons. Some of the cargos in order to lighten the ship so as to reduce loss.
  2. Particular Average loss: This occurs when the cargo or ship suffers partial loss or damage. This loss here is accidental.
  3. LIFE ASSURANCE: Life assurance is an insurance cover which is taken as a protection against loss caused by the death of a person. This type of insurance taken covers that is certain that it must occur but the time of occurrence is what one don’t know.

Types of Life Assurance

  1. Whole Life Assurance: This type of assurance covers the life of the person for his/her life time and the assure pays premium throughout his life. The sum the assured is payable only at death.
  2. Endowment Assurance: This policy cover provides for the sum assured to be paid either after a fixed number of years at death. It is taken at a specified period, depending which one occurs first.

Endowment assurance is a convenient and profitable way of preparing to meet some future financial commitment such as old age.

  1. Term assurance: In this policy, payment will be made to the assurer if the life assured dies within the specified period. Eg. of term assurance are decreasing term, convertible term and family income benefit assurance.
  2. Annuities: This is a form of pension in which an assurance company, in return far a certain sum of money agrees to repay this money plus the investment income that it I able to earn over the expected life time of the investor or for a specific period.

Reasons for taking life assurance

  1. It is a useful way of providing for funeral and death expenses.
  2. It provides for the repayment of capital of partners death.
  3. The whole life assurance can be used as a collateral for obtaining loan from   banks.
  4. It is also a useful way to provide for the welfare of the assureds’ dependants   after his death.
  5. It is used for provision at the old age when the person can no longer do thing as he normally do.
  6. It provides for a lump sum of money on retirement, and it is a means of savings for the future.
  7. The endowment policy makes provision for permanent disability.                                                                                                                                                                                                                                                                                                                                                                                     FIRE INSURANCE: This is the type of insurance which the insurer undertakes to pay or indemnify the insured for any loss or damage occasioned by fire to the property during the period covered by the policy. This may be as a result of fire, lighting, wiring, explosion. It covers will risk associated by fire.

          The fire insurance may take with average or without average clause.

With Average Clause:

The compensation will be based on the actual value of the subject matter destroyed by the fire, the amount for which it was insured and the total loss suffered. The compensation would be calculated like this


          Amount insured x actual loss

Value of the property or subject matter


If a person insured his subject matter for N5000, The cost of the subject matter is N30000 and a loss of N20,000 occur.

This will calculate thus

N 1500 × 20000       

N30,000              = N 10,000


Without Average clause:

The insurance company will only compensate the insured for the estimated amount of loss. That is N20,000 in the above example

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