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business > Insurance *G11 > Flashcards

Insurance *G11 Flashcards

1
Q

Is donation a concept relating to insurance

A

No

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2
Q

Insurance and assurance difference

A

*Insurance - on assets, risk not guaranteed
*Assurance - on lives, risks guaranteed

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3
Q

Insurance definition *3

A

Contract of good faith between insurer and insured*
where insurer promises to compensate for insured risks*
and insured pays monthly premium

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4
Q

Premiums are based on

A

Value of insurable interest and risk involved

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5
Q

Aim of insurance

A

To provide protection for assets against damage or theft

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6
Q

Assurance definition

A

Cover for risk that is certain

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7
Q

What is the aim of assurance *2

A

Provide security for family* and cover long term risks

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8
Q

Examples of assurance risks

A

Death
Retirement

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9
Q

Policy holder definition

A

Person who takes out policy (is registered in their name)

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10
Q

Beneficiary meaning

A

Person who the policy pays out to

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11
Q

Compulsory insurance *3

A

*Road Accident Fund
*Unemployment Insurance Fund
*Compensation for Occupationsl Injuries and Diseas Act

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12
Q

Non compulsory insurance *7

A

*fire
*commercial
*household
*vehicle
*money in transit
*fidelity
*all weather

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13
Q

What does UIF cover

A

Loss of income if one does not have a job
Retrenched or pregnant (17 weeks)

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14
Q

One may not claim uif if they were *3

A

Fired
Termination
Contract terminated

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15
Q

How much of employee salary is UIF

A

2%

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16
Q

Are domestic workers covered by UIF

A

Yes

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17
Q

UIF excludes *3

A

Public servants
Foreigners on contract
People employed less than 24 hours a month

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18
Q

What does UIF stand for

A

Unemployment Insurance Fund

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19
Q

What does COIDA stand for

A

Compensation for Occupational Injuries and Diseases Act

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20
Q

Explain COIDA *2

A

Employers take out compensation on behalf of employees* as protection against injuries or death at work

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21
Q

How does COIDA protect the employer

A

It protects them against claims made by the employee

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22
Q

What compensation is made to employees that are unable to work due to injury *2

A

Medical expenses
Loss of income

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23
Q

COIDA does not apply to *4

A

*military
*domestic workers
*police
*casual workers

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24
Q

Where is the fee for COIDA payed

A

Compensation Commission - annually

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25
Q

What is compensation based on *2

A

Employee earnings
Risk associated with the profession

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26
Q

What does RAF stand for

A

Road Accident Fund

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27
Q

What does RAF apply to

A

Motor vehicles

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28
Q

Explain how RAF works *2

A

Innocent drivers and passengers are covered against financial loss* due to injury from accidents*

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29
Q

How is RAF contribution made

A

Levy on petrol and diesel

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30
Q

What does RAF compensation include *3

A

*medical and future medical expenses
*loss of income and future loss of income
*pain and suffering

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31
Q

What does fire damage cover

A

Damage to stock, buildings or equipment as a result of fire

32
Q

What does fire insurance include *2

A

*damage by smoke
*water used to extinguish

33
Q

What does fire insurance not include *3

A

Fire as a result of:
*riots/war
*volcanoes
*earthquake

34
Q

What does fire insurance premium depend on

A

Risk and item value

35
Q

Example of risk (fire insurance) *3

A

*nature of product
*availability to extinguishers
*building construction

36
Q

Why should insurer be notified as soon as a fire starts

A

To prove loss was a result of the fire

37
Q

What is the iron safe clause

A

Something that forces insured to keep stock records in a fire proof safe to prove value of stock

38
Q

Options for vehicle insurance *2

A

*third part, fire, theft
*fully comprehensive

39
Q

Explain the theft, fire and third party option of vehicle theft *2

A

*insured is covered against theft/fire
*if insured is responsible for accident, they’re not covered for damage, the other party’s vehicle is

40
Q

Explain fully comprehensive as an option of vehicle insurance *2

A

*it covers all damage to car
*other items must be listed separately to be insured

41
Q

What are premiums for vehicle insurance based on

A

Value of vehicle, risk of driver

42
Q

Risk of driver can include *2

A

*age
*driving history

43
Q

Explain all weather damage and theft as an insurance *2

A

*damage caused by weather will be insured
*stock and equipment stolen are covered

44
Q

What is premium based on for all weather damage and theft

A

Value of goods, risk involved

45
Q

An example of a risk for all weather damage and theft

A

Location

46
Q

Theft definition

A

Forced entry when business is closed to the public

47
Q

What does money in transit refer to

A

Cash being transported
like to the bank

48
Q

What is the max amount of money in transit that can be covered

A

It’s specified in the policy

49
Q

What does fidelity insurance cover

A

Losses due to dishonesty of employees (theft, fraud)

50
Q

What are the covers for fidelity insurance *2

A

*individuals specified by position
*a floating policy where all staff are covered for an amount

51
Q

What does liability insurance cover

A

One’s losses due to neglect or defect in property

52
Q

Liability policy indemnifies…

A

Insured for amount needed to be payed

53
Q

What is group life cover insurance *2

A

Insurance that ensures workers for an amount* equal to salary multiplied by a factor*

54
Q

Why is group life cover insurance less expensive *3

A

A large number of people are insured* so there is less risk* and the company monthly income increases*

55
Q

Explain loss of income insurance

A

If a person is unable to work, the policy pays out loss of income

56
Q

What are some non insurable risks *6

A

*inflation
*changes in fashion
*technological advances
*loss from bad debt
*loss from war
*illegal activities

57
Q

What are the requirements for a valid insurance contract *2

A

*insuranle interest
*good faith and honesty

58
Q

Explain insurable interest

A

*able to prove financial loss of object is damaged
*person/object forms contact baisis

59
Q

Examples of cover for insurable interest *4

A

*own life
*lives of copartner
*life of spouse
*life of property

60
Q

Example good faith and honesty *2

A

*relevant info that can affect risk is discussed
*questions must be answered honestly and accurately

61
Q

What are the additional requirements for good faith and honesty *min 3 max 5

A

*contractual capacity
*intention to bind - must be serious
*obligation
*legally binding
*communication of intent

62
Q

What does contractual capacity refer to *2

A

Legal age
Sound mind

63
Q

What does obligation refer to

A

Both parties must be clear of expectations

64
Q

What does communication of intent refer to

A

Contract must be specific

65
Q

What are the advantages of insurance *2

A

*protects business/individual from loss
*through indemnification, it ensures insured to be put in same financial position prior to event

66
Q

Advantages of assurance *4

A

*policies can be ceded to bank as loan security
*protects creditor if debtor dies
*provides security to families as breadwinners provide
*provides security as it compensates for medical expenses

67
Q

What concepts are related to insurance and assurance *max 8 min 4

A

*indemnification
*security
*average clause
*excess
*re insurance
*proximate cause
*subrogation
*cession/assignment

68
Q

What is indemnification

A

When the financial position of insured will be the same as it was before the event

69
Q

What is the purpose of security

A

Give security to insured’s dependents after death/retirement

70
Q

What does average clause refer to

A

If value for property is not fully insured, the full value won’t be payed out

71
Q

What is under insurance

A

Property isn’t insured for full value

72
Q

What is over insurance *2

A

Good are ensured for more than their value* - profit can’t be made so there’s the option to restore property*

73
Q

What is excess

A

What insured still has to pay

74
Q

What is reinsurance

A

Contract between two insurers to spread risk
When insurer can’t cover full risk, they place a portion of it to a reinsurance company

75
Q

What is proximate cause

A

Insurer is only responsible for loss as a direct result of event*

business (19 decks)

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