Managing a Business and a Household: Insurance

Question 1

Risk Management

Answer 1

A planned approach used by business and households to deal with risks that can affect them

Question 2

Ways to minimise risks

Answer 2

1. Install security systems
2. Training
3. Appoint a health and safety officer
4. Health and safety
5. Insurance

Question 3

Insurance

Answer 3

Financial protection against a possible loss.

Question 4

Proposal form

Answer 4

The form you fill in when applying for insurance.

Question 5

Claim form

Answer 5

The form you fill when making a claim e.g fire has damaged a building.

Question 6

Insurance premium

Answer 6

The fee paid for insurance.

Question 7

Actuary

Answer 7

Calculates the premium to be paid by the insured.

Question 8

Assessor

Answer 8

Calculates the amount of compensation to be paid.

Question 9

Principles of Insurance

Answer 9

1. Insurable interest: this means that the insured person must own the item to be
   insured. They must benefit from existence and suffer financially from its loss.
2. Utmost Good Faith: Utmost Good Faith means that when you are completing the
   proposal and claim forms you are completely truthful.
3. Indemnity: This means that you cannot profit from insurance. You cannot be better
   off after a loss has occurred.
4. Contribution: It is used when a household or business insures an item with two or
   more insurance firms.
5. Subrogation: It states that once you have received compensation, you give up your
   right to make any further claims.

Question 10

Average clause formula

Answer 10

    Real Value of the item

Question 11

Contribution formula

Answer 11

                    Total amount insured

Question 12

Insurance premium calculations

Answer 12

1. Risk: The higher the risk the higher the premium.
2. Claims: The amount paid out by the insurance firms in the past will affect the level of
   premium
3. The higher the value of the item the higher the premium.
4. Loadings: These increase the cost of insurance premiums as they add extra risk to the
   policy
5. Discounts: The person seeking insurance can reduce the premium by taking steps to
   reduce the risk, e.g installing fire alarm.

Question 13

Insurance policies for business

Answer 13

1. Product Liability: Covers a business against the claim made by the customers who
   were injured or became ill while using the firms product.
2. Public liability: Covers a business against claims made my members of the public who
   are injured while being on business premises
3. Employers liability: Covers against claims made by an employee for accident, illness or
   injury in the workplace
4. Plate glass: Covers a business against large shop windows being broken.