Business Studies for Class 11 Chapter 4 Business Services

Learn CBSE Business Studies Index Terms for Class 11, Chapter 4 Including Definitions and Meanings

1. Business Service – Business services are the activities that assist businesses yet do not deliver a tangible commodity. For instance, Information technology is one business service that supports various other business services such as shipping, procurement, and finance. Most businesses today are inclined towards such specialised business services.

In other words, business services are services used by business enterprises in conducting the activities of the business. For example, Banking, insurance, warehousing, communication services, etc.

2. E-Banking – Electronic banking has many names like web-based banking, e-banking, virtual banking, web banking, and online banking. It is just the utilisation of telecommunications networks and electronic networks for conveying different financial services and products. Through e-banking, clients can acquire their records and manage numerous exchanges utilising their cell phones or personal computers.

3. Commercial Banks – The term commercial bank is concerned with a monetary establishment that acknowledges deposits, offers financial account services, makes various advances, and offers fundamental monetary items like savings accounts and certificates of deposit (CDs) to people and private business entities.

4. Banking – Banking is directly or indirectly connected with the trade of a country and the life of each individual. It is an industry that manages credit, cash, and other financial transactions. In banking, the commercial bank is the most influential institution for any country’s economy or for providing any credit to its customers.

In India, a banking company is responsible for transacting all business transactions, including the withdrawal of cheques, payments, investments, etc. In other words, the bank is involved in the deposit and withdrawal of money, repayable on demand, savings, and earning a decent amount of profits by lending money.

Banks also help to mobilise the savings of an individual, making funds accessible to businesses and helping them to start a new venture.

5. Insurance – Represented in the form of policy, insurance is a contract in which the individual or an entity gets financial protection; in other words, reimbursement from the insurance company for the damage (big or small) caused to their property.

The insurer and the insured enter a legal contract for the insurance called the insurance policy that provides financial security from future uncertainties.

6. Insurable Interest – The principle of insurable interest says that the individual (insured) must have an insurable interest in the subject matter. Insurable interest means that the subject matter for which the individual enters the insurance contract must provide some financial gain to the insured and also lead to a financial loss if there is any damage, destruction, or loss.

7. Indemnity – The principle of indemnity says that insurance is done only for the coverage of the loss; hence insured should not make any profit from the insurance contract. In other words, the insured should be compensated the amount equal to the actual loss and not the amount exceeding the loss. The purpose of the indemnity principle is to set back the insured in the same financial position as he was before the loss occurred. The principle of indemnity is observed strictly for property insurance and is not applicable to the life insurance contract.

8. Proximate Cause – The principle of proximate cause is also called the principle of ‘Causa Proxima’ or the nearest cause. This principle applies when the loss is the result of two or more causes. The insurance company will find the nearest cause of loss to the property. If the proximate cause is the one in which the property is insured, then the company must pay compensation. If it is not a cause the property is insured against, then no payment will be made by the insured.

9. Subrogation – Subrogation means one party stands in for another. As per this principle, after the insured, i.e. the individual has been compensated for the incurred loss to him on the subject matter that was insured, the rights of the ownership of that property go to the insurer, i.e. the company.

Subrogation gives the right to the insurance company to claim the amount of loss from the third party responsible for the same.

10. Contribution – The principle of contribution applies when the insured takes more than one insurance policy for the same subject matter. It states the same thing as in the principle of indemnity, i.e. the insured cannot make a profit by claiming the loss of one subject matter from different policies or companies.

11. Mitigation – The principle of mitigation says that as an owner, it is obligatory on the part of the insurer to take necessary steps to minimise the loss to the insured property. The principle does not allow the owner to be irresponsible or negligent just because the subject matter is insured.

12. Life Insurance – The insurance policy whereby the policyholder (insured) can ensure financial freedom for their family members after death. It offers financial compensation in case of death or disability.

While purchasing the life insurance policy, the insured either pays the lump-sum amount or makes periodic payments known as premiums to the insurer. In exchange, of which the insurer promises to pay an assured sum to the family if insured in the event of death or disability or at maturity.

13. Fire Insurance – Fire insurance is a type of general insurance policy where the insurer helps in paying off any damage that is caused to the insured by an accidental fire till the specified period of time, as mentioned in the insurance policy.

Generally, a fire insurance policy is valid for a period of one year, and it can be renewed each year by paying a premium, which can be a lump sum or in instalments.

The claim for a fire loss must satisfy the following conditions:

i. It should be an actual loss

ii. The fire must be accidental and not done intentionally.

14. Marine Insurance – Marine insurance is a contract between the insured and the insurer. In marine insurance, protection is provided against the perils of the sea. The instances of dangers in the sea can be a collision of the ship with rocks present in the sea, attacking off the ship by pirates, or fire on the ship.

Marine insurance covers three different types of insurance which are ship hull, cargo, and freight insurance.

15. Telecom Services – Telecom services are the exchange of data and information between the sender and the receiver over long distances by electronic means. This includes the transmission of voice, audio, and video information from one place to another.

16. Warehousing – Warehousing was initially viewed as a provision of static units for keeping and storing goods in a scientific and systematic manner so as to maintain their original quality, value, and usefulness, but now it is viewed as a logistical service provider of the right quantity, at the right place, in the right time, in the right physical form at the right cost.

We hope that the offered Business Studies Index Terms for Class 11 with respect to Chapter 4: Business Services, will help you.

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