Vehicle insurance (also known as auto insurance , GAP insurance , car insurance , or motor insurance ) is insurance purchased for cars , trucks , motorcycles , and other road vehicles. Its primary use is to provide financial protection againstphysical damage and/or bodily injury resultingfrom traffic collisions and against liability that could also arise therefrom. The specific terms ofvehicle insurance vary with legal regulations in each region. To a lesser degree vehicle insurance mayadditionally offer financial protection againsttheft of the vehicle and possibly damage to thevehicle, sustained from things other than trafficcollisions.
Evolution of insurance industry in Nigeria: The British colonial government introduced insurance business into Nigeria in 1910. Traditionally, though some forms of social insurance existed in part of the Nigerian society long before their arrival. This was in form of mutual and social schemes, which evolved through, the extended family system, age grades and clan unions typical of African cultures. This simple form of social insurance was practiced by means of cash donations, organized collective labour of assisting one another and the entire community, who suffer mishap.
The people in the community, especially those of the same age bracket collect funds periodically just in the same manner as the industrial life insurance premiums are collected. Right from the on set, Nigerian cultures and indeed African people have seen the reason to contribute funds to assist members who may suffer mishap such as illness, important ceremonies as child naming, marriage, funeral and all kinds of social obligations. The enactment of workmen’s compensation ordinance of 1942 and the Road Traffic Act of 1945 both contributed to the meaningful take- off of insurance industry at that time.
Against the backdrop of the fact that Nigerian economy inthe 60’s was dependent on agriculture, Marine Insurance was popular for external trader to produce export. Fire Insurance was never popular and the expatriates mainly held mortgage security policies. However, the parliament in the first republic set up Obadan Commission (1961) to review the situation in insurance industry and was to come up with recommendations. The outcome of Obadan Commission gave rise to the establishment of Insurance Companies Act of 1961.
Arising from this Act, by 1969, Nigeria had registered close to 50 insurance companies, though with foreign domination. The foreign domination was so serious that both Great Nigeria Insurance Company (GNIC) owned by Western Region and African Alliance Insurance (AAI) Company had a meagre share of operation when compared with the overall volume of business in the entire industry. This unfavourable trend persisted for a long time that the Federal Government of Nigeria became skeptical as to what future holds for the then insurance industry that was generally dominated by the foreigners.
Nigerians were not allowed to hold sensitive positions, which would have equipped them for managerial or technical responsibilities in the industry. Out of the 25 insurance companies that existed in 1960, only 7 were indigenous and their total market share was far below 10%, as the bulk of the business went to the foreign-owned companies. en. m. wikipedia. org/wiki/Vehicle_insurance 1. Individual Protection By covering an individual’s valuables orearning potential, insurance protectspeople from personal financial disaster.
They can weather losses without losingthe means to purchase necessities. 2. Third Party Protection Some types of insurance, such as liabilitycoverage, protect innocent third partiesfrom economic loss. 3. Reduction of Lawsuits Because liability insurance steps in topay for damages caused to a thirdparty, those who suffer injuries ordamage do not have to take legal actionto seek damages. This reduces theamount that government entities have to pay to hear court cases. 4.
Availability of Goods Without insurance, lenders would beunwilling to finance homes, vehicles orother valuables because the risk of losingtheir investment would be much higher. Far fewer people would be able to affordthese items without financing. 5. Employment Insurance creates jobs in nearly everyarea of the country. It also allowscompanies to continue producing homes,cars, jewelry and other items thatwould represent substantial financiallosses if they were damaged or stolen.
This allows people who work for thesecompanies to continue earning income.www. ehow. com/m/facts_5788663_economic-importance-insurance. html Firstly, insurance, like banking, promotes savings. When we are insured we have to pay premium. Secondly, insurance promotes investment. Theinsurance company can easily invest its funds inindustry, agriculture and commerce. When weinsured a person or his heirs get the insuranceback, they can invest it in some business orindustry. All this helps national economy to grow.
Thirdly, the insured person can get loans againstthe security of insurance policy from insurancecompany or from banks.www. blurtit. com/q660816. html In the 1st step, insurance policy saves time and effort and prevents your huge losses from occurring, while inside 2nd step, it secures your financial allowance and earning in the loss. When a normal person buys a cheap car insurance , he then thinks more than 100 times concerning the circumstances and the effects of this activity over his economic climate, because insurance policy may push a weight on his pants pocket. www. seoarticlelibrary. org/2013/05/how-does-insurance-contribute-in. html? m=1.