2. Household & Business Insurance Mr.Poole Business Studies

3. Distinguish between Insurance Protection against a loss you hope will not happen. Eg. car accident. Assurance Protection against a loss you know will happen. Eg. death. Mr.Poole Business Studies

4. Two reasons for adequate insurance You must cover all possible risks. Eg. In household insurance: fire, theft, flood and accidental damage. You must insure enough to cover full amount of loss. Eg. If your house is worth €200,00 you must insure it for that value. Mr.Poole Business Studies

5. The basis for insurance is sharing the risk. Large number of small premiums Insurance pool/fund Ins. co. expenses Ins. co. profit Compensation Mr.Poole Business Studies

6. Distinguish between Insurable risk Things that can be insured. Eg. Houshold insurance; fire theft, damage. Personal accident for a farmer. Non-insurable risk Things that cannot be insured against. Eg. Damage to car used in crash testing. Personal accident for a bungee jumper. Mr.Poole Business Studies

7. Insurance Terms Exclusion Clause: Situations that cannot be insured. Eg. Household insurance: A house situated near a river that is known to flood every year. Mr.Poole Business Studies

8. Insurance Terms Policy Excess/Excess Clause: The insured person may have to pay the first €100 of the compensation themselves. This is to reduce the number of small claims being made. To make people more careful. Mr.Poole Business Studies

9. Insurance Terms Proximate Cause: What is the exact cause of the loss. Eg. was it fire or theft or flood? ie. what actually happened? This helps the insurer decide if compensation is due. Mr.Poole Business Studies

10. Insurance Terms Compensation: Is the money you get when you make a claim. Mr.Poole Business Studies

11. Principles of insurance Insurable Interest Utmost Good Faith Indemnity Contribution Subrogation Mr.Poole Business Studies

12. Insurable Interest In order to insure something you must benefit from its existence & suffer from its loss. Eg. You can insure your own house but you cannot insure your neighbours’s house. Mr.Poole Business Studies

13. Utmost Good Faith You must tell all relevant information when filling out an application for insurance. Eg. If you have an illness you must tell the ins. co. as they may want to charge a higher premium or not insure you at all. Mr.Poole Business Studies

14. Indemnity You cannot make a profit from insurance. There is no point in insuring your house for more than it is worth as the ins. co. will only compensate you for the actual value of the house. Mr.Poole Business Studies

15. Contribution If a risk is insured with two insurance companies each will pay half of the compensation. Eg: A ring insured with two ins. co.’s. for €1,000 Both will give ?? €500 each. Mr.Poole Business Studies

16. Subrogation Passes the legal right of the insured over to the insurer to claim from a third party who caused the loss. Eg. Whirlpool oven causes house to go on fire. Ins. co. pays compensation to insured and then seeks their own compensation from whirlpool. Mr.Poole Business Studies

17. Average Clause Related to underinsurance and partial loss. If you only insure an item for a fraction of the value, you only get the same fraction compensation. Mr.Poole Business Studies

18. Formula SUM INSURED x CLAIM = COMPENSATION ACTUAL VALUE Mr.Poole Business Studies

19. EXAMPLE 1. Mary insured her house for €200,000. The market value is €250,000. A fire causes €10,000 worth of damage. How much compensation will she receive??? Mr.Poole Business Studies

20. Solution 1 200,000 x 10,000 = 8,000 250,000 Mr.Poole Business Studies

21. Documents used in insurance Proposal Form Application form for insurance Mr.Poole Business Studies

22. Policy Contract of insurance Gives full details of cover Must be filled away safely Mr.Poole Business Studies

23. Cover Note Temporary policy Used in car insurance, while you are waiting for insuracne disc Mr.Poole Business Studies

24. Certificate of Insurance Proof of insurance Mr.Poole Business Studies

25. Claim Form Form you fill out when a loss occurrs and you want compensation Mr.Poole Business Studies

26. People in insurance Broker Gives advice on insurance Sells insurance on behalf of lots of companies. Eg: Mr.Poole Business Studies

27. Agent Sell insurance for only one co. Eg: FBD, Quinn Direct…….. Mr.Poole Business Studies

28. Actuary Calculates insurance premiums Mr.Poole Business Studies

29. Loss Adjuster Calculates the value of the loss Works for the insurance co. Mr.Poole Business Studies

30. Loss Assessor Calculates the value of the loss Represents the insured Mr.Poole Business Studies

31. Steps involved in taking out insurance 1. Decide what risks you want covered. (ask a broker) 2. Fill out proposal form. (ugf) 3. Pay your premium. 4. File your policy in a safe place. Mr.Poole Business Studies

32. Steps involved in making a claim. 1. Contact guards & ins. co. 2. Obtain estimates of lost/stolen items. 3. Fill out claim form. (ugf) 4. Talk to assessor and agree on compenstaion. Mr.Poole Business Studies

33. Terms relating to premium calculation Mr.Poole Business Studies

34. Premium The cost of insurance Money you pay to be insured The higher the risk the higher the premium Mr.Poole Business Studies

35. Risk Effect Things that cause premiums to be high or low Eg: In car insurance  No car accidents = lower premium Under 25 male = higher premium Mr.Poole Business Studies

36. Loading Extra premium for higher risk Eg: A smoker will have a higher premium for life assurance than a non smoker Mr.Poole Business Studies

37. Discount Money taken off premium for a lower risk Eg: In house insurance you get a discount for having an alarm Mr.Poole Business Studies

38. No Claims Bonus In car insurance you get a discount if you do not claim for any accidents the previous year It encourages people not to claim for small amounts Mr.Poole Business Studies

39. Renewal Date The date you must have your premium paid by. Eg : 1/10/08 Mr.Poole Business Studies

40. Days of Grace You may be given a few extra days to pay your premium Not allowed in motor insurance Mr.Poole Business Studies

41. Premium Calculation Questions Mr.Poole Business Studies

42. Types of Personal Insurance Mr.Poole Business Studies

43. PRSI Pay Related Social Insurance. Statutory Deduction from you salary. You will receive an income if you are out of work due to illness, disabiity, maternity leave… Mr.Poole Business Studies

44. Medical Insurance In case you get sick or need an operation Eg: VHI Voluntary Health Insurance Mr.Poole Business Studies

45. Personal Accident Covers people who are injured due to an accident. Lump sum payment for loss of finger, sight, hearing etc. Mr.Poole Business Studies

46. Salary Protection Provides an income in case you can’t work due to illness. Will provide you with a higher income than PRSI only. Mr.Poole Business Studies

47. Pension Plan Provides you with lump sum and income for your retirement. Mr.Poole Business Studies

48. Holiday Insurance Provides you with health care if you get sick on holidays. Mr.Poole Business Studies

49. Risk Effects for Personal Insurance Loading Older, smoker, risky job Discount Younger, non-smoker, low risk job Mr.Poole Business Studies

50. Business Insurance Terms Mr.Poole Business Studies

51. Types of Business Insurance Theft Insurance: theft of equipment and stock Fire Insurance: damage to premises, equipment and stock Consequential Loss: covers the firm for loss of profits while a business is closed as a result of fire or flood. Mr.Poole Business Studies

52. Continued……………. Fidelity Guarantee: compensates an employer for loss of cash arising from dishonest workers Cash in Transit: covers theft of cash while in transit between the business and bank Goods in Transit: covers theft or damage to goods while been transported Motor Insurance: compulsory covers damage or injury cause by motor vehicles. Mr.Poole Business Studies

53. Continued…….. Employers liability: employees injured at work Public liability: customers injured while visiting the business Product liability: injury to customers using the product Bad debts: loss due to customers not paying their debts. Mr.Poole Business Studies

54. Reasons for business insurance Protection of assets against fire and theft Protection against legal action as a result of accidents to the public or staff Legal reasons- motor insurance Mr.Poole Business Studies