4.3 Insurance Flashcards
(53 cards)
What is Risk Management?
A planned approach used by businesses & households to deal with risks that can affect them. It involves identifying all possible risks (e.g., fire or personal injury) and calculating the cost of preventing these risks.
How can risks be minimized?
- Install security cameras: Can prevent security risks, e.g., theft.
- Provide training: Make everyone aware of health & safety procedures, e.g., where to go in a fire.
- Appoint a health & safety officer: Report safety issues & conduct regular safety inspections.
- Get insurance: Take out insurance cover to transfer the risk to an insurer firm in return for paying a premium.
What is insurance?
Protection against a possible future financial loss.
What is the importance of insurance?
- Saves money - Small premium & large payouts.
- Legal requirement: e.g., motor insurance - by law.
- Risk management - Reduces risks as they must carry out risk assessment before taking out insurance.
What is a proposal form?
The form you fill in when applying for insurance. You must reveal all material facts.
What is a claims form?
The form you fill in when making a claim, e.g., when a fire has occurred in a building. Must reveal all material facts.
What is an insurance policy?
The document you receive when you buy insurance. It is a legally binding contract and must be in writing. It sets out the terms and conditions of the policy.
What is a renewal notice?
This document is sent out before the policy is due for renewal. It reminds the insured that their policy is due for renewal and the premium for renewing the policy.
What is a cover note?
Temporary document that proves you are insured until the full policy document is sent out, e.g., car disc.
Who is the insured?
The household/business that takes out an insurance policy.
Who is the insurer?
The insurance firm in which the insured has taken out their policy, e.g., AXA.
What is a premium?
The fee paid for insurance. It consists of basic premium & loadings/discounts. Paid monthly/annually.
What is loading?
An additional charge on top of the basic premium due to increased risk, e.g., driver with L licence.
What is a no claims bonus?
A reduction in the premium if a person has not claimed on their insurance since the last renewal date.
What are days of grace?
A short period of time given to the insured to pay the insurance premium. (Not available on motor)
What is the average clause?
This applies in cases of under-insurance and is closely linked with indemnity. It is used to calculate compensation when an item has been insured for less than its actual value.
What is an actuary?
Calculates the insurance premium to be paid by the insured.
What is an assessor?
Calculates the amount of compensation to be paid.
What is a loss adjuster?
When a loss occurs, the amount of compensation to be paid is decided by the insurance firm. If the insured is unhappy, they can get a loss adjuster to assess the situation.
What is an insurance agent?
A person/business that sells insurance on behalf of one insurance business, e.g., AXA or Allianz.
What is an insurance broker?
A person or business who sells insurance on behalf of a number of different insurance companies. They are paid a commission by the insurance company, e.g., Chill Insurance.
What are the 5 principles of insurance?
- Insurable interest
- Utmost good faith
- Indemnity
- Contribution
- Subrogation
What is insurable interest?
The insured person must own the item for it to be insured. They must benefit from its existence & suffer financially from its loss, e.g., a household can insure its own valuables but not its neighbours.
What is utmost good faith?
When completing proposal & claims forms, you must be truthful & reveal all material facts.
