MADAM SCHOLASTICA’S HAIR SALON Madam Scholastica owns a big salon in centre of Lagos with fifty hair driers and two motorized: generators in a large premise. She had in her employment, sixty staff out of which forty five are professional stylists, five cashiers and ten support staff. The company makes a lot of money from high class members of the society who are prepared to pay heavily for their services at their convenience, even in their offices or homes. The company has comprehensive insurance cover. on ‘all their four vehicles. It also has Employer’s Liability Insurance which it Continues to renew for the past five years without making claims. The policies were taken from different companies. Recently, a chemical was bought for washing hair which caused damage to .many customers’ hair, this.led to the payment of compensation to, some customers while others deserted the salon. The director had been advised to obtain other insurance policies to cover their liabilities to customers and third parties but did *not do anything about it. In the last two weeks of operation, four staff had accident with the Company’s car while returning from home service to a customer. Twb of them were seriously injured. A cashier disappeared, with a sum of N21-00;000 cash withdrawn from the company’S bank account.
(a)Under what policy will the injured employees be compensated?
(b) State and explain two policies that the director should have taken to cover their liabilities to customers and third parties.
(c) What other insurance policies would the company take in future to cover the cashiers that handle cash?
(d) Explain two other insurance products that will be useful to the company.
Explanation
Solution to Scholastica's Hair Salon:
(a) The two injured employees would be compensated under employers'-liability insurance which covers injuries sustained by employees while engaged on the work.
(b) Policies that the director should have taken are:
(i) Professional Indemnity Insurance: This policy provides compensation for death, bodily injury and financial loss arising from the professional negligence of the insured.
(ii) Product Liability Insurance: This policy covers the insured against losses, death, illness and bodily injury arising from the wage of a product bythird parties or consumers.
(iii) Public Liability Insurance: This policy covers the liability of the insured toward the members of the public leading to death, bodily injury and damage to third party properties while in the premises of the• hair salon.
(c)(i) The company can take out fidelity guarantee insurance to cover lasses arising from the dishonesty of employees:handling cash. (ii)Money insurance can be taken to cover cash in the premises as. well as the movement cash from office' to the bank and vice versa.
(d) Other insurance products that will be useful to the company are:
(i) Personal Accident Insurance: This covers the insured's employees against risk of accident leading to bodily injury or death on twenty four hour basis.
(ii) Fire Insurance: This covers the insured property against• of fire, lightning and explosion.
(iii) Theft Insurance: This policy covers the insured property against damage or loss happening in the ,d promises through forcible and violent exit or entry.
(iv) Credit Insurance: Grains cover against losses arising from non-fulfillment of trade obligations by customers
(v) Business Interruption: This policy covers the insured for loss of earnings arising from the disruption of his business by fire or other perils.
(vi) Engineering Insurance: This grants protection against losses arising from electrical or mechanical breakdown, of machines.