Pecuniary insurance provides protection to businesses against purely financial losses (e.g. from fraud, legal expenses or business interruption) rather than physical damage to property.
Pecuniary Insurance includes three types of insurance: Money Insurance, Fidelity Insurance and Credit Insurance.
Money Insurance – this policy provides coverage for loss of money, cheques and/or negotiable instruments while in a possession of a named employee, collector, messenger, etc. occasioned by any vehicular accident, robbery or theft while the money is in transit.
This cover is available against the risks while:
- In transit from premises to bank or vice versa
- In a safe, in office premises
- Out of safe during working hours
- In the care & custody of designated staff
The following factors are taken into consideration while determining the premiums:
- Estimated annual carrying i.e. estimated amounts at risk.
- Maximum limit for any one carrying
- Maximum limit for safe keeping at any given time
Fidelity Insurance- this policy protects the insured against dishonest employee/s and indemnify the insured Financial losses directly sustained due to fraudulent or dishonest acts committed by any employee/s of the insured company.
The following factors are considered when determining insurance premiums:
- Number of employees handling cash and valuables
- Limits of exposures
- Employees status and credibility
Credit Insurance is commercial insurance that protects any business selling goods or services to their business customers on credit terms. Credit Insurance covers the risks of non-payment by a business customer as a result of insolvency or protracted default. Insolvency is viewed as the formal failure of the business customer and protracted default covers the situation where the business customer admits liability for payment but does not pay within an agreed credit period after the original due date.
Specific Credit Insurance Covers:
- Business to business transactions (Supplier to Buyer)
- Insolvency Protracted Default (financial Risk excluding commercial disputes)
- Political Risks (For Export Sales)
- Open Account Sales (Cash, Bank Guarantees)
Standard factor for valuing the risk includes:
- The company’s industry
- The financial history of each creditor
- The insurable Turnover
- Past bad Debt history