Insurance

Question 1

Insurance

Answer 1

financial protection that covers any loss that might happen e.g. Burglary, Car Accident.

Question 2

Utmost Good Faith

Answer 2

A person is obliged to answer all questions truthfully when completing the proposal form and disclose all relevant facts.
Example: If you are asked if you smoke.

Question 3

Insurable Interest

Answer 3

You must gain (financially) by its existence and suffer (financially) by its loss.
Example: you cannot insure your friend’s bike.

Question 4

Indemnity

Answer 4

You cannot make a profit from a loss. The compensation you receive will only be equal to the current value of the item.
Example: If a watch is insured for €200 you cannot make a claim for €300.

Question 5

Subrogation

Answer 5

The insurance company has the right to seek compensation from the party that caused the loss/damage and take the damaged item for scrap value.
Example: Sueing negligent electrician and claiming selling remaining stock after fire damage.

Question 6

Contribution

Answer 6

If you insure an item with more than one insurance company, each insurance company will contribute/divide the compensation.

Question 7

Average Clause Formula

Answer 7

Average Clause = (Sum Insured /Actual Value) x Loss.