Insurance Conor Flashcards
Define risk management
It is the plan approached by a business and household to deal with the risk which may affect them. It involves identifying all possible risks and put measures in place to reduce them.
What are the ways you can minimise risk?
Installing security systems like CCTV
Training employees so that they have been necessary training
Appoint to health and safety officer – so they can conduct regular safety checks and report safety issues
Take out insurance – transfer is risk to an insurance company and they pay a premium for it
What is insurance?
It is protection against financial losses
What is a proposal for Emma?
It is the form you fill out when applying for insurance
What is premium?
It is the fee paid for insurance to the insurance company
What is loading?
It is an additional charge on your insurance due to an increased risk
E.g. if you smoke your health insurance will be higher
What is a no claims bonus?
It is a reduction in the premium you pay if there has been no claims made since the last renewal date
What is policy excess?
It is when a claim is made the first portion of the claim is paid by the insured person.the remainder is paid by the insurance company.the larger policy access to lower the premium
What does an actuary do?
They calculate the premium to be paid
What does an assessor do?
They calculate the compensation to be paid
What does the loss adjuster do?
If the insurance company is unhappy with the loss has been claimed they appoint an independent person to assess the situation
What are the five principles of insurance?
Utmost good faith
Indemnity
Insurable interest
Subrogation
Contribution
What does contribution mean under the principles of insurance?
If you hold more than one insurer liable for losses, they have to share the loss
E.g. if you have to insurance for your car, they must split the compensation
What does subrogation mean under the principles of insurance?
Once you receive compensation, you give up the right to make further claims
E.g. if your house goes on fire due to an electrical fault and you receive compensation from your house insurance you cannot then go and sue your electrical contractor
What does utmost good faith mean under the principles of insurance?
It means that all material facts must be revealed failure to do so makes the insurance void
E.g. If you’re applying for car insurance, you must not lie about the amount of penalty points you have.
What does indemnity mean under the principles of insurance?
An insured person cannot make profit from insurance
E.g. if a car is written off the person receives a compensation for the value of the car currently not the value it was when they bought it
What does insurable interest mean under the principles of insurance?
It means the insured must gain from the existence of the insured item
E.g. you cannot insure your neighbours house
What does under insurance mean?
It means the business has inadequate insurance cover
Why would people under insure
It is to reduce business costs with leads to higher profit
What formula can you use to calculate the compensation if the items in question are under insured to ensure that they do not profit?
You can use average clause
What is the average clause formula for under insurance?
Average clause= amount item is insured for multiply by the claim
divided value of the item
What are the types of insurance for Business?
Product liability – it covers the business and gain claims made by customers who are injured or became ill while using the Business products
Keep personal – it covers the business against losses suffered when a key employee leaves the business
Fidelity guarantee – cover to Business against any losses from fraudulent activities
Goods in transit – cover his losses suffered from theft or lots of goods while in transit or damage caused in transit or delays
Public liability – protects against claims made by individuals who are injured on the business premises
Employers liability – covers against claims made by an employee who was injured over becomes ill in the workplace
What are types of insurance for businesses and households only?
Building and contents – it provides cover against damage to the structure of the building caused by a flood fire or a storm. The contents of the building are also insured.
Pay related social insurance – it is taken from an employees growth wage to pay for social welfare
Motor insurance – required by the law to have any vehicle on public roads
