Differences Between National Insurance and Commercial Insurance

what are National insurance and commercial insurance?

 National insurance according to the long man dictionary, is a  system organized by the British government in which workers and employers make continuous payments and which makes provision of money for the unemployed, old, or ill.

It refers to a scheme established by governments for the total reduction of human suffering emanating from unemployment, sickness, invalidity, or old age; the money used to manage the affairs of the scheme is being generated from contributions made by employed individuals, their employers, and in some countries such as Britain, the government.

Origin of National Insurance:

National Insurance emanated from the development of twentieth-century Germany under Bismarck Pioneered social insurance, followed by Britain, the Scandinavian countries, the united state of American and other countries.

It has to do with the use of insurance principles to the basic human needs in a condition of personal distress.

In Nigeria, the introduction of national insurance was in 1961 when the federal government enacted the national provident fund Act.

Commercial Insurance

Commercial Insurance refers to insurance that alleviates or protect business owners against any form of damages, loss, or injuries, such as scrupulous cyberattacks, fire outbreak, damage of property, and other risks that could result in the downfall of the business.

In other words, Commercial Insurance is that insurance that safeguards businesses against losses as a result of such things as damage to property and injuries to employees: The company provides services such as risk management and health and safety to commercial insurance buyers.

Major Differences Between Comercial and national insurance

  • National Insurance is designed, administered and supervised by government and is compulsory for those covered by the scheme, except where there is contracting out provision


    Commercial Insurance is affected as a matter of choice by a person or organization, except in a few instance of compulsory insurance.
  • In National Insurance, the relevant law setting up the scheme specifies the category of people covered by it.


    In Commercial Insurance, It is a private contract between a person or organization and the insurance company concerned.
  • The relevant rate to be contributed and the total benefit payable are stated by the law setting up the scheme in National insurance


    The sum insured is determined by the insured and the insurance company fixes the premium in commercial insurance contract.
  • The National Insurance fund which benefits are paid is conributed to by employed persons, their employers and some countries by the government.


    The Commercial insurance fund is a pool of Premiums paid by policyholders out of which claims are paid.
  • Disputes are settled by tribunals in National insurance business


    In Commercial insurance business, dispute are settled by either negotiation, arbitration, or litigation.


In our analysis from the first and second paragraphs, we pointed out that commercial insurance is that type of insurance that helps to shield businesses against any costly risk, financial injuries, or breakdown of machine or property.
Also, the National insurance

business refers to a scheme established by governments for the total reduction of human suffering emanating from unemployment, sickness, invalidity, or old age.

It is very important to note that both commercial and national insurance scheme helps to protect the individual business against the occurrence of loss and also to reduce the negative effect of human suffering resulting from unemployment.

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