WAEC Commerce 2002 Theory question 103

(a)(i) Consequential loss – insurance against loss of profit and extra costs that follow when insured property is damaged (e.g. by fire) and the business cannot operate for a time.
(ii) Cover note – a temporary document issued after the proposal form is completed, giving cover (usually for about 30 days) until the policy is issued or the proposal is declined.
(b) Any four: compensation for loss so business can continue; reduces/transfers risk and worry, encouraging investment; policies can serve as collateral for loans; encourages saving (endowment, pensions for staff); fulfils legal requirements (e.g. motor, employer's liability); protects against liability to third parties; source of funds for investment.

Explain each term in a sentence or two.