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  • Indemnity

    Chapter 3 - Cotton marketing - Insurance in an uncertain world

     
     
    nsurance provides financial protection against the outcome of an unforeseen, pre-defined event. Insurance is a contract between the owner of the commodity, who wishes to avoid or minimize the risk of loss or damage, and the insurance company, which takes on that risk in return for the payment of a premium.

    Indemnity is the term used to describe the right to receive compensation for a loss suffered that is covered within an insurance contract. The owner of the commodity must practise risk avoidance, just as the insurance company must indemnify the insured or make good legitimate losses.

    It should be noted that not every risk or eventuality can be insured. Insurable risks must be deemed to be unforeseen or chance events. They must also adhere to the principle of ‘insurable interest’, and the risk must not be against public policy (law or regulation). 
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    Cotton Exporter's Guide

    Brochure - African cotton promotion
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