Insurance - Chapter 20 Flashcards
What is insurance
Insurance is financial protection that covers any loss that might happen e.g. Burglary
What is a premium?
A Premium is the fee paid by the insured to the insurance company to cover a particular risk
What is utmost good faith?
Utmost Good Faith means a person is obliged to answer all questions truthfully when completing the proposal form and disclose all relevant facts. If you lie you may not get compensated if you make a claim
Example: If you are asked if you smoke you must be truthful when answering questions or you will not receive any compensation.
What is insurable interest
Insurable Interest means you must gain financially by its existence and suffer financially by its loss.
Example: you cannot insure your friends bike as if it gets stolen you will not be financially affected.
What is indemnity?
Indemnity means you cannot make a profit from a loss. The compensation you receive will only be equal to the current value of the item.
Example: If a watch is insured for €200 you cannot make a claim for €300 if it is stolen.
What is subrogation?
Subrogation means the insurance company has the right to seek compensation from the party that caused the loss/damage and take the damaged item for scrap value.
Example: An insurance company pays compensation to a business whose stock was destroyed by a fire caused by a negligent electrician.
What is contribution?
Contribution means if you insure an item with more than one insurance company, each insurance company will contribute/divide the compensation.
Example: If you an ensure an item for €20,000 with more than 1 insurance company, each insurance company will contribute/divide the compensation of €20,000
What is life assurance?
Assurance is protection against a risk that will happen e.g. death
Whole Life Assurance means an agreed amount of money is paid to the person’s dependants when the individual dies
Endowment Assurance means an agreed amount of money is paid when the insured reaches a certain age or on the death of the person – whichever comes first.
Term Policy means an agreed amount is paid if you die within a certain period of time. This might be appropriate if you want to protect your family while they are young.
What is a no claims bonus?
A No Claims Bonus is a discount on an insurance premium. It is a reward for not making any claims
What is loading?
Loading is an extra amount added to your premium due to added risk
What is motor insurance
Motor Insurance is required by law
Third Party provides compensation to owners of property damaged by your car – it does not compensate for any damage to your car.
Third Party Fire and Theft provides compensation to owners of property damaged by your car – it does not compensate for any damage to your car. Car is also covered in case of Fire or Stolen
Fully Comprehensive provides compensation to all injured parties by your car AND also compensation for any damage to your car.Due to extra cover – premium is more expensive.
What is home insurance?
Home insurance covers the house building in the case of fire, storm or flood damage
What is home contents insurance?
Home contents insurance covers the house contents in the case of fire, theft or flood damage
What is health insurance?
Health insurance covers the cost of hospital care and medical bills in case of accident or illness.
What is travel insurance?
Travel insurance covers the person on holiday in case of missing luggage, passports, cancelled flights.
What is mobile insurance?
Mobile insurance covers the person in case their phone is lost or stolen.
What is mortgage protection insurance?
Mortgage protection insurance is a type of life insurance policy that repays your mortgage if you die during the repayment term.
What are the steps to taking out insurance?
1. Seek Quote: Shop around for the best quote.
2. Complete Proposal Form: This is an application form to be completed when applying for insurance. You must tell the truth when filling in the proposal form. Items on Proposal Form - Age, Address, Gender, Value of Item
3. Pay Premium: This is the fee paid for insurance.
4. Issue Policy: the Insurance Company will send you out your Insurance Policy. This is a document stating all the details of:
• the risks covered,
• period covered,
• value of cover
• conditions of the contract
It is the contract of Insurance
Who is an actuary and what do they do?
Actuary is the person who calculates premium. When calculating the quote the Actuary will establish how risky or how likely it is for you to have an accident. The greater the risk the higher the premium you must pay.
How does insurance work?
A Premium is the fee paid by the insured to the insurance company to cover a particular risk. The premiums collected are managed by the insurance company and used to pay compensation for any claims. Compensation is the payment made to an insured person if they suffer a loss or injury. Any money not paid out as compensation is profit for the insurance company
What is compensation?
Compensation is the payment made to an insured person if they suffer a loss or injury
