U4 Ch.15 Insurance

Question 1

Risk Management

Answer 1

Planned approach to deal with risks that can affect them. Involves identifying all possible risks and calculating the cost of protecting themselves against them

Question 2

Ways to minimise risks

Answer 2

1. Security Systems
2. Training
3. Appointing Health and Safety Officer
4. Health and Safety Awareness
5. Insurance

Question 3

Insurance

Answer 3

Financial Protection against possible loss

Question 4

Proposal Form

Answer 4

fill in when applying for insurance

Question 5

Claim Form

Answer 5

fill in when making claim

Question 6

renewal notice

Answer 6

sent out before policy is due for renewal

Question 7

insurance policy

Answer 7

document you receive when buy insurance. Legally binding sets out terms and conditions

Question 8

Cover note

Answer 8

Document proving insurance is in place. Used until full policy document is sent to the insured

Question 9

Policy Excess

Answer 9

Amount insured agrees to pay towards a claim, insurance company pays the rest.

Question 10

Loading

Answer 10

Additional Charge on top of basic premium because of an extra risk

Question 11

No claims bonus

Answer 11

reduction in premium charged if no claim has been made since last renewal date

Question 12

Days of grace

Answer 12

Short period of time given to insured to pay insurance premium

Question 12

Actuary

Answer 12

Calculates premium to be paid by insured

Question 13

Assessor

Answer 13

Calculates compensation to be paid in claim

Question 14

Loss adjuster

Answer 14

when the insured is unhappy with the amount of compensation decided by firm after loss occurs, independent person is appointed to assess insurance situation and has power to adjust compensation

Question 15

Insurance Agent

Answer 15

Sells insurance on behalf of one insurance business

Question 16

Insurance Broker

Answer 16

Sells insurance on behalf of a number of different insurance firms. Get a commission from when final policy is taken out.

Question 17

Principles of Insurance

Answer 17

1. Insurable Interest
2. Utmost Good Faith
3. Indemnity
4. Contribution
5. Subrogation

Question 18

Insurable Interest

Answer 18

Insured must gain from the existance of item and suffer financially from its loss. Can’t insure something unless you have a vested interest in it. E.g. can ensure your car but not your neighbours

Question 19

Utmost Good Faith

Answer 19

Person must reveal all material facts when applying for insurance and be truthful in their application for insurance. E.g. Proposal Forms must be completed accurately

Question 20

Material Facts

Answer 20

Info that may not be asked on the proposal form but could affect the premium or compensation. E.g. house near a river prone to flooding

Question 21

Indemnity

Answer 21

Insured person cannot make profit from insurance claim. Insurance can at best put an insured person in the same financial position they were prior to a loss occurring. E.g. If a car is written off in accident, the insured recieves its replacement value and not the original sum paid for it

Question 22

Average Clause

Answer 22

Used by insurance firms to calculate compensation when item is insured for less than its actual value.
(Amount insured for X Claim) / real value
-Always write formula

Question 23

Contribution

Answer 23

If you hold more than one insurer liable for your loss, they share the loss. Linked to indemnity since insured isn’t allowed to profit from insurance claim. E.g. if you take out 2 policies on your car, you can’t collect from both insurers. Both companies would share the compensation between them.

Question 24

Subrogation

Answer 24

Once insured receives compensation, they give up their right to make further claims or sue third parties responsible for damage. Insurance firm can pursue whoever caused damage for compensation. E.g. If a third party is responsible for damaging your car and your insurer compensates you, your insurer takes your right to sue the third party

Question 25

Premium Factors

Answer 25

1. Risk 2. Claims (in past) 3. Value 4. Loadings 5. Discounts

Question 26

Calculating Premium Order

Answer 26

Basic Premium + Loadings -Discounts

Question 27

Household Insurances

Answer 27

1. Property (fire/storm/flood) 2. Contents (furniture/goods from things like theft) 3. Motor 4. PRSI (compulsary from gross pay) 5. Health 6. Mortgage Protection (cannot meet repayments. Often Compulsary) 7. Income Protection (main earner is unable to work) 8. Personal Accident 9. Travel (Baggage loss + delayed flights) 10. Identity theft 11. Life Assurance

Question 28

Motor Insurance

Answer 28

Required by law 1. Third Party (damage by insured to third party) 2. Third Party, fire and theft (1 + insured car from fire and theft damages) 3. Comprehensive (1 + 2 + Accidental damage to insured vehicle)

Question 29

Life Assurance and types

Answer 29

**Payed to named person when insured dies** 1. Whole Life (pay premium until death) 2. Term Life (pay for a certain length. Only pays out if they die within period) 3. Endowment (Pays out either when policy reaches maturity or person dies. Whichever is first)

Question 30

Business Insurance

Answer 30

1. Premises/Property Insurance 2. Contents 3. Motor (if have own vehicles) 4. PRSI (pay PRSI on behalf of each employee. Known as Employer's PRSI) 5. Product Liability (injured/ill because of product) 6. Public Liability (members of public injured on business premises) 7. Employer's Liability (employee injured/ill in workplace) 8. Key Personnel (if key employee leaves business) 9. Fidelity Guarantee (fraudulent activities by employees) 10. Consequential Loss (loss arise as a result of other risk) 11. Cash In Transit (theft of cash while off premises) 12. Plate Glass (large shop windows broken)

Question 31

Underinsurance and its implication

Answer 31

Underinsurance is when insured fails to ensure asset for its full value. In a claim for total/partial loss there may be economic losses for the policy holder, since claim would exceed maximum amount policy can pay out. Usually done for lower premiums however losses arising from claim will far outweigh savings experienced

Question 32

Potentially Uninsurable Risks

Answer 32

1. Home Insurance when House on a flood plain 2. Motor Insurance if previous driving disqualifications deem applicant to be to great a risk

Question 33

why take out Insurance?

Answer 33

1. Cost Saving (premium cost is usually less than cost if risk occurs 2. Legal Requirements 3. Risk Management (reduce risk)