2Y: Insurance Flashcards
What is Insurance?
Insurance offers financial protection against a possible loss e.g. Car Crash
It is designed to place the insured person back in the same financial position they were in before the loss occurred.
What is Assurance?
An Assurance Policy gives protection against the occurrence of something that will happen e.g. everybody will die.
How does Insurance work?
What is Risk?
This is the chance of losing something of value.
What is Loading?
Loading is an increase in the standard premium due to an extra risk.
e.g.
- Young driver.
- House near a river.
- Dangerous job.
- Living in a city/bad neighbourhood.
What is Reduction?
Reduction is a discount given on a standard premium for:
- Having a burglar alarm.
- Having a sprinkler system.
- Being a non-drinker and a non-smoker.
- No-claims bonus.
What is a No-Claims Bonus?
A No-Claims Bonus is a reduction in your premium if you have not made a claim against your policy.
What are the 5 priciples of Insurnance?
- Principal of utmost good faith: As a client it is the duty of the insured to disclose all the facts to the insurance company.
- Principle of Insurable interest: You can only insure an item which will be of loss to you if damaged.
- Principle of indemnity: Indemnity means that an insured may not be compensated by the insurance company in an amount exceeding the insured’s economic loss.
- Principle of Contribution/Double Insurance: Double insurance is the insurance of same subject matter with two different companies or with the same company under two different policies.
- Principal of subrogation: For example, if you get injured in a road accident, due to reckless driving of a third party, the insurance company will compensate your loss and will also sue the third party to recover the money paid as claim.
What are the 4 steps in applying for Insurance?
- Complete a proposal form
- The Actuary will decide on the premium.
- You will receive a cover note.
- Finally, the insurnance company will issue the insurance policy.
What is a proposal form?
A proposal form is the application form for insurance.
What is an Actuary?
An actuary is a person who compiles and analyses statistics and uses them to calculate insurance risks and premiums.
What is an Insurance Policy?
An Insurance Policy is the actual contract of insurance setting out all the details and the risks covered.
What are the 3 steps in Making A Claim?
- Complete a claim form giving all details of the loss suffered.
- The insurance company will send out an assessor or a loss adjuster to calculate the value of the loss.
- The insurance company will pay the compensation.
What is an Assessor?
A person employed by the insurance company to make sure that claims made are covered by the policy and to investigate the cause of the loss or damage.
What is a Loss Adjuster?
- Loss Adjusters are independent investigators who become involved when there may be a disagreement between the insured and the insurance company.
- Loss adjusters are impartial and independent insurance claims specialists. Insurance companies send claims inspectors to check upon the circumstances and for larger or more complicated claims, they employ the skills of a loss adjuster.
- They help to collect all relevant information concerning claims and then send it to the insurance company with their recommendations so settlement of claims can be made as quickly as possible.
How do you calculate the average clause?
See image.
