Chapter 14 - Premiums & Claims

Question 1

What four things do they take into account when calculating the premium

Answer 1

1. The amount you want to insure the item for
2. The type of insurance you’re looking for
3. How many people want to take out the same type of insurance
4. The likelihood of an accident happening

Question 2

Give examples of loading

Answer 2

• Younger people pay more for motor insurance
• Smokers pay more for health insurance
• People in big cities pay more than those who live in small towns

Question 3

How could you reduce risk

Answer 3

• Install a smoke or fire alarm
• Install sprinkler system in your business premises
• Drive carefully, wear seatbelt and get your car serviced regularly
• Don’t smoke
• Install a car alarm or immobiliser
• Get regular exercise

Question 4

Calculating the premium

Answer 4

Total premium = Basic premium +loadings – reductions

Question 5

Average clause

Answer 5

Amount item is insured for
—————————————- X Loss suffered
Current value of item

Question 6

Assessor

Answer 6

Inspect damage and calculates the compensation

Question 7

Actuary

Answer 7

The person who calculates the premium for the insurance company