insurance Flashcards
implication of underinsurance
•insured fails to insure assets for full value
•may result in economic losses to the policy holder, as claim would exceed max amt that can be paid out by the insurance policy
•reason may be for lower premiums, but losses arising from claim will outweigh savings in reduced insurance premiums due to underinsurance
public liability insurance
•protects business against financial loss as a result of a claim made by members of the public like consumers who’re injured or hurt on the business premises
employers liability insurance
•protects the business against financial loss as a result of claims made by employees due to injuries they’ve sustained in the workplace
premises/buildings insurance
•provides business with protection against any loss caused by damage to structure of building caused by fire, flood or storm
•you should ensure smoke alarm is fired and there’s adequate fire extinguishers in the premises
contents insurance
•provides business with protection against any loss or damage to stock, raw mats, components etc caused by burglary, fire or flood
motor insurance
•compulsory type of insurance that must be paid by law if business or individual own a motor vechile
•protects business from financial loss due to motor accident
•types of motor insurance: third party, third party fire & theft, fully comprehensive
risk management
•the identification of all possible risks or losses
•eg. risk of fire, employer negligence, personal injury loss, etc and trying to minimize the impact of these risks occurring
ways to reduce risks in business
•insurance- transfer risk to insurance company for premium where company compensate any loss
•safe procedures- manner of doing smthn strictly laid out & adhered to, secure procedures for managing cash
•health & safety statements- regulations, identification of hazards
•security systems- alarms, CCTV, fire doors, etc. provision of safety equipment, training and protective clothing
what formula for average clause
insured value x loss suffered
purpose of insurance proposal form
•used to apply for insurance cover & the company is given full particulars of the risk insured
•helps insurance company calculate premium based on all potential risks in relation to the insurance policy
principles of insurance
•utmost good faith
•indemnity
•insurable interest
•subrogation
•contribution
utmost good faith
•all material facts must be revealed
•person taking out insurance must answer all questions truthfully
•failure to do so can make insurance cover worthless
•if insurance contract obtained by fraud or misrepresentation it’s void
•eg. driver declare truthfully number of penalty pts on licence
indemnity
•insured person can’t profit off insurance
•i.e insurance can only put insured person in same financial position as prior to loss occurring. if a car is written off in an accident, the insured receives its replacement value & not original sum paid for it
insurable interest
•the insured must gain from the existence and suffer from the loss of the insured asset/risk
•you can ensure your own car but not your neighbors
subrogation
•if third party responsible for damagin your car in an accident, you’re compensated by your own insurer, your insurer can then sue the other driver
•subrogation says when you accept an insurance settlement the insurer gets your right to sue the third party
•prevents you collecting twice for the same damage & gives ur insurer a way to recoup its losses
