INSURANCE FOR HOUSEHOLDS MR. KEANE

INSURANCE COMPANY LOGO QUIZ

LOGO SOLUTIONS

WHAT DO YOU KNOW ABOUT INSURANCE?

INSURANCE Insurance is an agreement between you and an insurance company.

HOW DO I GET INSURANCE? You Insure items by paying the insurance company a fee.

WHY PAY FOR INSURANCE? You insure items you are afraid of losing in case of an accident or burglary.

If an accident or burglary does happen and the insured items are damaged or stolen, the insurance company pays you the money those items were worth.

THE INSURER The Insurance company who sells you insurance.

THE INSURED You, the person purchasing the Insurance

IMPORTANCE OF INSURANCE Insurance is vital for households and to protect against common risks For a household it removes financial worries if a loss occurs

HOUSEHOLD INSURANCE POLICIES House Insurance Health Insurance Travel Insurance Motor Insurance PRSI – Pay Related Social Insurance

APPLYING FOR INSURANCE The person will contact either a an insurance broker or an insurance agent for a quotation. This can also be done online. They will fill out an application form for insurance which is known as a proposal form. Based on this information the insurance company will decide on the premium (fee) the person will pay. Calculated by an actuary. When the premium has been paid the insurance company sends the person a policy – this is the person’s insurance contract

HOUSEHOLD INSURANCE POLICIES House Insurance – The building and contents are covered

HOUSEHOLD INSURANCE POLICIES Car Insurance – This is required by law. There are three types Third Party – The other person and their car are covered. The persons own car is not Third Party, Fire and Theft – As above but the persons own car is covered for fire damage and theft Comprehensive – All parties are covered. It is the most expensive

HOUSEHOLD INSURANCE POLICIES Life Assurance – Covers something that unfortunately will happen (death).There are three types Whole Life – An agreed sum is paid when the person dies Term – The policy covers a fixed term (e.g. Ten years). If the person is still alive at the end of the term they receive no payout Endowment – The policy covers a fixed term (e.g. Ten years). If the person is still alive at the end of the term they receive a large payout. Often used by families as a form of saving

HOUSEHOLD INSURANCE POLICIES Health Insurance – Taking out insurance with companies like VHI/QUINN/AVIVA ensures that hospital bills are covered in the event of illness

HOUSEHOLD INSURANCE POLICIES PRSI – Pay Related Social Insurance Personal Accident – mainly taken out by holidaymakers. Salary Protection – Up to 75% of the person’s salary is paid until retirement in the event of a long term illness.

INSURANCE PREMIUM Premium is determined by… The level of Risk involved. (Higher Risk –> Higher Premium) The Value of the item being Insured. The length of Time the Insurance is for. The Costs and Profits of the Insurance Company.

INSURANCE PREMIUM The basic rule is the greater the risk, the greater the premium Loadings – Added to the premium due to extra risk factors (e.g. A smoker applying for Life Assurance) Deductions – Subtracted from the premium due to reduced risk factors (e.g. A non – smoker applying for Life Assurance)

CALCULATING PREMIUM A house valued at €300,000 will pay the following premium if they choose the quotation from Chester Insurance plc: €2 per €1,000

CALCULATING PREMIUM Solution: €2 Per €1,000 €300,000 =€300 €1,000 €2 x 300=€600 Total Premium =€600

CALCULATING PREMIUM Calculate the Premium based on the following quotation: Buildings at €1.80 per €1, House Valued at €140,000 2.House valued at €350,000 3.House Valued at €600,000

PRINCIPLES (RULES) OF INSURANCE 1. Utmost Good Faith – The person applying for insurance must tell the truth. They must disclose all material facts (e.g. previous driving convictions) 2. Insurable Interest – The item must be yours to insure. You must gain by its possession and lose out if it is damaged 3. Indemnity – You can’t make a profit from insurance. You can just cover your loss 4. Contribution – If you insure the same risk with more than one insurance company they share any payout 5. Subrogation – If an insurance company pays out on a claim, they take over certain rights from the insured person (e.g. the right to sell a damaged car for scrap)

MATCH THE FOLLOWING A. Utmost good faith B. Insurable Interest C. Indemnity D. Contribution E. Subrogation 1.Insurance companies share compensation. 2.Cannot profit from Insurance 3.Must tell the truth 4.Right to sue or salvage 5.Gain by existence and suffer from the loss.

COMPENSATION Compensation is the pay-out an Insured person receives from the Insurer (Insurance Company) when an accident occurs.

AVERAGE CLAUSE Average Clause is when you have under-insured your possessions. This means that you will be compensated to the same extent to which you are insured. (3/4 Insured = ¾ Compensated) Example of the Average Clause House Value = €250,000Insured for = €150,000 Fire Damage = € 40,000 Average Clause= Sum Insured xLoss Market Value of Item

AVERAGE CLAUSE Therefore: €150,000 x €40,000 €250,000 3 x €40,000 = €24,000 5 Compensation Therefore, only 3/5 is Insured, so only 3/5 is compensated, regardless of the size of the loss.

KEY TERMS Utmost Good Faith Insurable Interest Indemnity Contribution Subrogation Premium Proposal Form Policy Claim Form Actuary Assessor Broker Agent Compensation PRSI Whole Life Assurance Endowment Policy Term Policy