Chapter 15 - Insurance

Question 1

What is risk management?

Answer 1

A planned approach used by businesses and households to deal with risks that can affect them. Identify possible risks and calculate the cost of protecting against them

Question 2

What are 5 ways we can minimize risk?

Answer 2

1. Install security system
2. Training e.g. cpr training
3. Appoint a health and safety officer - someone who conducts safety inspections
4. Health and safety e.g. hard hat for construction workers
5. Insurance

Question 3

What is insurance?

Answer 3

Financial protection against possible loss

Question 4

What is a proposal for?

Answer 4

Form you fill out when applying for insurance

Question 5

What is a claim form?

Answer 5

A form you fill out when making a claim

Question 6

What is an insurance policy?

Answer 6

Document you receive when you buy insurance. Legally binding contract

Question 7

What is a renewal notice?

Answer 7

A document sent out before the insurance is due for renewal, state’s the premium of renewing the policy

Question 8

What is a cover note?

Answer 8

A document that proves insurance is in place. Used until official insurance policy document is sent out

Question 9

What is a premium?

Answer 9

The amount paid for insurance

Question 10

What is a policy excess?

Answer 10

The amount that the insured pays when they have made a claim

Question 11

What is loadings?

Answer 11

An additional charge on top of the basic premium

Question 12

What is a no claims bonus?

Answer 12

A reduction in the premium if no claim has been made

Question 13

What are days of grace?

Answer 13

A short period of time given to the insured to pay the premium

Question 14

What is an actuary?

Answer 14

Someone who calculates premium

Question 15

What is an assessor?

Answer 15

Someone who assesses the amount of compensation to be paid

Question 16

What is a loss adjuster?

Answer 16

An independent person who can be appointed to assess the situation and adjust the amount of compensation

Question 17

What is an insurance agent?

Answer 17

A person who sells insurance on behalf of one insurance company e.g. an agent of axa

Question 18

What is an insurance broker?

Answer 18

Person who sells insurance on behalf of many insurance companies

Question 19

What are the 5 principles of insurance?

Answer 19

Insurable interest 
Utmost good faith
Indemnity
Contribution
Subrogation

Question 20

What is insurable interest?

Answer 20

A person must benefit from an items existence and suffer from its loss financially in order to insure it

Question 21

What is utmost good faith?

Answer 21

Must be completely truthful when filling out proposal forms

Question 22

What are material facts?

Answer 22

Information that is not asked on a proposal form but you must state e.g. if you are a smoker for health insurance

Question 23

What is indemnity?

Answer 23

You cannot make a profit from insurance

Question 24

What is average clause? (Def + formula)

Answer 24

Calculates compensation when something is under insured

(Amount item insured for)(claim)/real value of item

Question 25

What is contribution?

Answer 25

If an item is insured with two companies, the companies split the compensation (no profit made)

Question 26

What is subrogation?

Answer 26

Once you have received compensation for a claim you cannot make a further claim

Question 27

How is insurance calculated?

Answer 27

``` Risk Claims Value Loadings Discounts ```

Question 28

What types of insurance do both households and businesses need?

Answer 28

PRSI premises Contents Motor

Question 29

What are the 3 types of motor insurance?

Answer 29

Comprehensive Third party Third party fire and theft

Question 30

What other types of insurance should a household have?

Answer 30

``` Health Mortgage protection Income protection Personal accident insurance Travel Identity theft Life assurance ```

Question 31

What are the 3 types of life assurance?

Answer 31

Term life policy Whole life policy Endowment

Question 32

What types of insurance should a business have? (8)

Answer 32

Product liability - covers against claims made by customers who suffer injury or illness from products Public liability - covers against claims made by public who suffer injury on premises Employers liability - covers against claims made by employees who suffer injury on premises Key personnel - covers costs of finding a replacement for a valuable member of staff who leaves Fidelity guarantee - covers against fraud by employees Consequential loss - covers against loss that happens as a result of another loss Cash in transit - covers against cash when it is not on the premises Plate glass - covers damage to windows

Question 33

What are 3 reasons for insurance?

Answer 33

Legal requirements Less cost Risk management