Insurance Chapter 13 Flashcards
What is a proposal form
The application form for insurance. It is a list of questions about the person taking out the insurance and the object they want to insure.
What is a premium
The fee paid for insurance.
What is Insurance policy
A written document from the insurance company and contains all the details about the insurance contract.
What is no claims bonus
If you have motor insurance and you don’t have any accidents during the year, you will receive a discount of 10% on your premium for the next year. This is known as a no claims bonus and is a reward for being a careful driver.
What is policy excess
The amount if the loss you have to pay yourself when a claim is made. The insurance company will not pay the total amount of the loss.
What is insurance
A written promise by an Insurance company to pay money to a person who has suffered a loss
What are the types of household insurance
Home insurance
Motor insurance
Explain home insurance
Consists of buildings insurance and contents insurance
Premiums depends on value of house and contents
Discount will be offered to homes protected by burglar, alarms smoke alarms, window locks and neighbourhood watch schemes.
Explain motor insurance
(i) Third party (required by law )
🔹if you have an accident the insurance company will only pay for the damage to the other car involved.
(ii) Third party fire and theft
🔹You will get comprehensive if your car was stolen or damaged by fire.
(iii) Comprehensive
🔹 Everyone involved in the accident is compensated for their injuries and for damage to their cars including the person responsible for causing the accident.
What are the rules of insurance
1) Insurable interest
2) Utmost Good Faith
3) Indemnity
4) Subrogation
5) Contribution
Explain Insurable interest
You can only insure something if you have an interest in the item i.e you benefit from having the item and it would cost you money to replace it if it was stolen or damaged.
Explain Up Most Good Faith
When a person is taking out insurance they must answer all questions on the proposal form truthfully and give the insurance company any relevant information about themselves and the item they want to insure. All material facts must be disclosed.
Explain Indemnity
You must not make a profit from insurance. You should end up in the same financial position after the loss or damage as you were in before the loss or damage occurred.
Explain Subrogation
Once an insurance company pays out compensation the insurance company becomes the owner of the item insured.
Explain Contribution
If you have the same item insured with more than one insurance company and it gets stolen or damaged, you will only get paid once. Each of the insurance companies will pay part of the compensation depending on how much was insured with them.
Explain home insurance
Consists of buildings insurance and contents insurance
Premiums depends on value of house and contents
Discount will be offered to homes protected by burglar, alarms smoke alarms, window locks and neighbourhood watch schemes.
Explain motor insurance
(i) Third party (required by law )
🔹if you have an accident the insurance company will only pay for the damage to the other car involved.
(ii) Third party fire and theft
🔹You will get comprehensive if your car was stolen or damaged by fire.
(iii) Comprehensive
🔹 Everyone involved in the accident is compensated for their injuries and for damage to their cars including the person responsible for causing the accident.
What are the rules of insurance
1) Insurable interest
2) Utmost Good Faith
3) Indemnity
4) Subrogation
5) Contribution
Explain Insurable interest
You can only insure something if you have an interest in the item i.e you benefit from having the item and it would cost you money to replace it if it was stolen or damaged.
Explain Up Most Good Faith
When a person is taking out insurance they must answer all questions on the proposal form truthfully and give the insurance company any relevant information about themselves and the item they want to insure. All material facts must be disclosed.
Explain Indemnity
You must not make a profit from insurance. You should end up in the same financial position after the loss or damage as you were in before the loss or damage occurred.
Explain Subrogation
Once an insurance company pays out compensation the insurance company becomes the owner of the item insured.
Explain Contribution
If you have the same item insured with more than one insurance company and it gets stolen or damaged, you will only get paid once. Each of the insurance companies will pay part of the compensation depending on how much was insured with them.
