Chapter 8 Flashcards
What is peril?
A peril is a risky event
What is a hazard?
It is a condition that makes peril worse
What is Property damage insurance?
Property damage insurance indemnifies the policyholder against the loss of or damage to the policyholder’s own material property.
What is financial loss insurance?
This type of cover indemnifies the policyholder against events that have directly caused them a financial loss
What would be cover by a “pecuniary loss” ?
A company may suffer because a debtor does not pay the amount owed
What would be covered under “fidelity guarantee” ?
Money is stolen or embezzled by employees
What is covered under “business interruption” cover?
A company may suffer losses as result of having to suspend work for a period
of time, e.g. due to a strike or damage to the factory
What are Fixed benefits?
These are policies that simply offer an agreed sum assured when an agreed future event occurs.
What is Liability insurance?
Liability insurance provides indemnity where the insured is legally liable to pay compensation to a third party.These policies will not cover illegal acts or negligence.
What are the main types of liability insurance? (5)
Employers liability
Motor third party liability
Public liability
Product liability
Profession indemnity
What is employers liability?
this protects an employer from employees demanding compensation for work-related injuries, accidents and illnesses
What is Motor third party liability?
this protects vehicle owners from damage caused by them to other drivers, pedestrians or property.
What is public liability?
this protects companies from paying compensation to members of the public as a result of something that is seen as the company’s fault, e.g. accidents on their premises or damage caused by their employees.
What is product liability?
this protects companies from damage their products may have caused to the public.
What is professional indemnity?
this protects professionals such as actuaries, doctors, lawyers, financial advisors etc., from any claims against them as a result of advice or services rendered to clients in their professional capacity.
Describe premiums
Premiums are payable either as a single premium in advance, or as regular premiums over the term of the policy. Premiums continue until the end of term and do not cease if a claim is made.
Why is both the claim frequency and the claim value very unpredictable?
This is because most policies operate on the basis of indemnity, and the exact amount that will be required to put the policyholder in the same position will differ from event to event
