2024 WAEC INSURANCE: Insurance (insurance) WAEC Authentic Answers 2025 (2193)

(1a)

(i) Insurable interest: Mr. Jamiu has an insurable interest in the property because he is the owner and has a financial interest in it.

(ii) Indemnity: The insurance policy aims to restore Mr. Jamiu to his pre-loss state by covering the damages to the building.

(1bi)

The cause of the loss was the negligence of Mr. Jamiu in not switching off the gas cylinder properly, which led to the gas explosion when Moji lit a candle.

(1bii)

The sum insured (N4,500,000) is less than the value of the property (N5,040,000). This means that Mr. Jamiu is underinsured, and the insurance company will only pay a proportion of the claim based on the sum insured.

(1ci)

Premium payable = N4,500,000 x 0.35% = N15,750 (before discount)

Premium payable = N15,750 - (5% of N15,750) 

= N15,750 - N787.50 

= N14,962.50

(1cii) 

The amount payable is the amount of damage, which is N500,000. However, since the sum insured is N4,590,000, which is greater than the damage amount, the insurer will pay the full amount of N500,000.

(2a)

Theft insurance is a type of insurance policy that provides financial protection against losses incurred due to theft. It covers the insured property, such as personal belongings, business assets, or vehicles, against theft, burglary, and in some cases, vandalism.

(2b)

(PICK ANY THREE)

(i) Residential Buildings

(ii) Commercial Buildings

(iii) Personal Belongings

(iv) Business Equipment

(v) Stock and Inventory

(vi) Structural Improvements

(2c)

(PICK ANY THREE)

(i) Individual Policy: This type of policy covers an individual employee against whom the employer may have specific concerns regarding fidelity. It is tailored to provide protection against acts of dishonesty committed by that particular employee.

(ii) Collective Policy: A collective policy covers a group of employees, such as all employees in a specific department or all employees performing similar functions. This type of policy provides blanket coverage for multiple employees under one contract.

(iii) Position Policy: This policy covers the risks associated with specific positions within an organization rather than individual employees. If an employee holding a certain position commits a fraudulent act, the insurance provides coverage regardless of who occupies that position.

(iv) Blanket Policy: A blanket policy offers comprehensive coverage for all employees of an organization without specifying individual names or 'copied from e x a m p l a z a . c o m free' positions. It is designed to provide wide-ranging protection against losses due to dishonest acts by any employee.

(v) Floating Policy: A floating policy sets a maximum liability limit that can be applied to any loss or combination of losses caused by any employee within the insured group. This type of policy offers flexibility as the coverage amount can float and be allocated as needed across multiple claims.

(3a)

(i) Insurance Company:

An insurance company is a business organization that pools and manages risk by providing insurance policies to individuals, businesses, and organizations.

(ii) Insurance Buyer:

An insurance buyer is an individual or organization that purchases an insurance policy to transfer risk to the insurance company.

(iii) Insurance Intermediaries:

Insurance intermediaries are individuals or organizations that facilitate the sale of insurance policies between insurance companies and buyers. 

(3b) 

(PICK ANY THREE)

(i) Perils of the Sea: This is a risk covered due to damage or loss caused by natural disasters such as storms, typhoons, floods, earthquakes and other weather-related events.

(ii) Fire: This is a risk covered due to damage or loss caused by Fire, Explosion, Lightning.

(iii) Collision: This is a risk covered due to damage or loss caused by collisions with other vessels, collisions with objects (e.g., reefs, rocks) or collisions with the shore

(iv) Theft: This is a risk covered due to theft or pilferage of Cargo, Vessel, Equipment.

(4a)

(PICK ANY THREE)

(i) The proposer does not need to disclose facts that are common knowledge, such as legal requirements or laws.

(ii) The proposer does not need to disclose facts that the insurer already knows or should reasonably know through their own expertise and experience.

(iii) The proposer is not required to disclose any information that would decrease the insurer’s risk in the context of the policy. 

(iv) The proposer does not need to disclose personal opinions or beliefs, as these are subjective and not factual information

(v) Any facts that the insurer has specifically stated do not need to be disclosed or has waived the requirement for disclosure.

(4b)

(PICK ANY THREE)

(i) Risk Transfer: Insurance allows individuals and businesses to transfer the financial risk of potential losses to an insurance company in exchange for a premium. This provides a sense of security and stability.

(ii) Pooling of Risks:

Insurance companies pool the premiums of many policyholders to pay for the losses incurred by a few. This spreading of risk among many policyholders reduces the financial impact on any single member.

(iii) Indemnification: Insurance provides compensation to policyholders who suffer a loss, restoring them to their financial position before the loss occurred. This function ensures that policyholders do not suffer undue financial hardship.

(iv) Loss Prevention and Reduction: 'copied from e x a m p l a z a . c o m free' Insurance companies often promote loss prevention and risk management strategies to reduce the incidence and severity of losses, benefiting both the insurer and the insured.

(v) Capital Formation: By collecting premiums, insurance companies accumulate large sums of money which can be invested in various projects, contributing to economic development and capital formation.

(vi) Encouragement of Savings: Certain types of insurance policies, such as endowment and whole life policies, encourage savings by building a cash value over time which policyholders can benefit from.

(7a)

Engineering insurance is a type of insurance that covers risks associated with engineering projects, construction, and installation of machinery and equipment. 

(7b)

(i) Excess is a deductible amount that the insured must bear before the insurer pays the claim.

(ii) Warranty is a promise or guarantee made by the manufacturer or supplier that a product or equipment will perform as expected or meet certain standards. 

(7c) 

(PICK ANY THREE) 

(i) Machinery Breakdown Insurance: Covers sudden and unforeseen damage to machinery and equipment, including electrical and mechanical failures.

(ii) Contractors' All Risks Insurance: Covers contractors against damage to property, equipment, and third-party liability during construction projects.

(iii) Erection All Risks Insurance: Covers the risk of damage to equipment and machinery during installation, erection, and testing.

(iv) Electronic Equipment Insurance: Covers electronic equipment against damage, breakdown, and malfunction.

(v) Plant All Risks Insurance: Covers plant and machinery against damage, breakdown, and malfunction, including mechanical and electrical failures.