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Ideas of Insurance ■ Car insurance ■ Health insurance ■ Insurance fraud ■ Health cover ■ House insurance ■ Protection ■ Damages ■ Floods? ?
Recent Headlines ■ Taoiseach Enda Kenny has been challenged to provide a not-for-profit stateinsurance scheme for victims of flooding – Independent. ie ■ A NEW insurance policy has been launched for homeowners unable to get cover because of flood risk – Independent. ie ■ Insurance industry has cast doubt on calls for a new scheme to help flood victims – rte. ie
Insurance protects us from risks that may occur e. g. car crash
Insurance Broker ■ An insurance broker works for themselves ■ They shop around on behalf of the client and gets the best policy ■ The broker will receive a commission from the company that they end up doing business with
Insurance Agent ■ An insurance agent sells insurance on behalf of a company that they work for ■ The agent will receive a commission for each sale
Insurable Risks –v- Non Insurable Risks Non – Insurable Risks ■ Something that I can get insurance for ■ Something I can’t insure against ■ E. g. car crash, burglary ■ E. g. failing business test, risks associated with dangerous activities – bungee jumping, sky diving
Assurance is cover for something that will definitely happen e. g. death
Types of Life Assurance ■ Whole Life Assurance: this is an insurance policy which we pay so that our family will be protected financially when we die. ■ Term Life Assurance: this protects us for a particular length of time. Compensation is paid only if you die during this period. ■ Endowment Policy: the insurance company will make a payment either when you die or at a certain date – this operates like a savings plan.
Insurance –v- Assurance ■ Insurance protects us from a risk that may happen e. g. car crash, house fire ■ Assurance protects us from risks that will definitely happen e. g. death
People Involved in Insurance ■ Insurer: the company giving out insurance ■ Insured: the person taking out insurance ■ Actuary: person who calculates the risk and the premium (cost of insurance per year) ■ Assessor/Loss Adjuster: person who reviews a claim and decides how much compensation is given e. g. looks at a crashed car and decides how much money the person will get to fix the damages ■ Insurance Agent: works for one insurance company and sells insurance for that company e. g. 123. ie ■ Insurance Broker: finds the best insurance policy on behalf of a client e. g. Chill Insurance
Principles of Insurance - 1 ■ Utmost Good Faith (uberimmae fidei): ■ You must disclose all material facts ■ i. e. we must tell the insurance company anything and everything that may affect their decision about insuring your property, or the premium (cost) they will charge you.
Principles of Insurance - 2 ■ Insurable Interest: ■ You can only insure something if you gain from existence (you benefit from it) and will suffer by its loss ■ E. g. we can only insure our own house, but not our neighbours house
Principles of Insurance - 3 ■ Indemnity: ■ You cannot make a profit from insurance ■ E. g. if we crash a 10 year old car then we cannot expect to get the price of a new car in compensation
Principles of Insurance - 4 ■ Subrogation: ■ Once an insurer has paid out compensation, they can do anything in their power to reclaim some of that compensation from a third party ■ E. g. after paying compensation for a car crash, they could sell the car for scrappage or bring the third party to court and get compensation for the damage
Principles of Insurance - 5 ■ Contribution: ■ If two or more insurers have insured the same risk, then they share the cost of compensation that is paid out if the insured has taken out more than one policy ■ E. g. if you are on holidays and have VHI and travel insurance, you cannot claim twice, you can only receive one payment ■ Companies communicate with each other
Insurance Terms ■ Proposal form ■ Claim form ■ A policy ■ Premium ■ Days of grace ■ Compensation ■ No claims bonus ■ Loading ■ Cover note ■ Quotation
Insurance Terms ■ A Proposal Form is an application form for insurance
Insurance Terms ■ A Claim Form is a form we fill in when we are looking for compensation (when an insured risk occurs)
Insurance Terms ■ A policy is an insurance contract detailing the terms and conditions of the policy
Insurance Terms ■ A premium is the amount of money we pay for insurance
Insurance Terms ■ No-claims Bonus: this is a reduction in the cost of insurance because you have not made any claims recently ■ Loading: this is an extra cost of insurance because you are a higher risk – e. g. if you live in an area that has a high crime rate ■ Cover Note: a note given to you to show that you are insured while you are waiting for your official policy to come from the insurance company ■ Days of grace: additional days allowed for the payment of your premium while still being covered. However this is not allowed in motor insurance. ■ Compensation: the amount of money you receive from the insurance company in the event of a claim. ■ Quotation: an estimate of the cost of insurance, from various insurance companies. ■ Replacement Value: insurance companies allow people to value the contents at their replacement value, so in the event of a claim you replace ‘old for new’.
How Insurance Works ■ Actuary calculates the risk and premium ■ Get quotations from various insurance companies ■ Choose the best price and fill out the proposal forms ■ Pay premium ■ Receive insurance policy from the company ■ If an insured risk occurs – complete claim form - make a claim ■ Assessor decides on amount of compensation ■ Compensation is paid out
The cost of the premium depend on: ■ ■ ■ The value of the item insured The number of risks that are covered The likelihood of the risk occurring The number of claims previously made by the insured Whether precautions have been taken to limit the risk occurring e. g. fire alarms, burglar alarms, safety precautions ■ Whether a ‘loading’ is applied – a loading is an extra amount of premium due to an extra risk ■ Whether the insured has a no-claims bonus – that is a reduction/discount due to no previous claims ■ Whethere is an excess clause – will the insured have to pay some of the damage themselves
Types of Insurance for Households and Businesses (Fill in the Blanks) ■ Third Party Insurance - If an insured person crashes in to someone – a third party- then ___________ is covered ■ Third Party Insurance - If an insured person crashes in to someone – a third party- then that person is covered ■ Third Party, Fire and Theft - Covers a________, and the insured person if their car goes on fire or is stolen ■ Third Party, Fire and Theft - Covers a third party, the insured person if their car goes on fire or is stolen
■ Comprehensive Insurance - Covers the ______ person’s car and any other third party in the event of an ________ ■ Comprehensive Insurance - Covers the insured person’s car and any other third party in the event of an accident ■ Property Insurance - Protects us in case of a fire, floods, theft and can protect both buildings and contents ■ Property Insurance - Protects us in case of a fire, floods, and theft and can protect both buildings and ________
■ Public Liability Insurance - Protects us in case a member of the public is ______ on our property ■ Public Liability Insurance - Protects us in case a member of the public is injured on our property ■ Life Assurance - Protects our family members _______ when the insured person dies ■ Life Assurance - Protects our family members financially when the insured person dies ■ Car Insurance - Protects us if we have a car accident or damages occur to the car. This is ________ by law ■ Car Insurance - Protects us if we have a car accident or damages occur to the car. This is required by law
■ Health Insurance - Insurance to cover ______ and health costs e. g. in case of hospitalization ■ Health Insurance - Insurance to cover medical and health costs e. g. in case of hospitalisation ■ Employers Liability - Protects an _______ from claims if an employee hurts themselves while at work ■ Employers Liability - Protects an employer from claims if an employee hurts themselves while at work ■ Consequential Loss Insurance - Covers a business for any loss of profit caused as a consequence of unavoidably having to ______ the business e. g. death/ breakdown of machinery ■ Consequential Loss Insurance - Covers a business for any loss of profit caused as a consequence of unavoidably having to shut the business e. g. death/ breakdown of machinery
■ Key Person Insurance - Covers a business against the death of or illness of someone who is _______ to the future of the business ■ Key Person Insurance - Covers a business against the death of or illness of someone who is central to the future of the business ■ Product Liability Insurance - Covers a business against claims if someone is ________ by a product ■ Product Liability Insurance - Covers a business against claims if someone is damaged/hurt by a product ■ Goods in Transit - Insures goods while they are being _________ ■ Goods in Transit - Insures goods while they are being transported
■ Fidelity Guarantee - Insures businesses in the event of fraud or dishonesty by _________ e. g. theft ■ Fidelity Guarantee - Insures businesses in the event of fraud or dishonesty by employees e. g. theft ■ PRSI (Pay Related Social Insurance) – a mandatory ________ from employees’ wages. Provides services such as social welfare, pensions, and other benefits ■ PRSI (Pay Related Social Insurance) – a mandatory deduction from employees’ wages. Provides services such as social welfare, pensions, and other benefit. ■ Income Protection - Protects you if you are _________ to work – also known as permanent health insurance ■ Income Protection - Protects you if you are unable to work – also known as permanent health insurance
■ Personal Accident - Insures you against _________ accidents ■ Personal Accident - Insures you against general accidents ■ Term Life Assurance - This protects us for a particular ___________. Compensation is paid only if you die during this period ■ Term Life Assurance - This protects us for a particular length of time. Compensation is paid only if you die during this period ■ Whole Life Assurance -This is an insurance policy which we pay so that our family will be protected ________ when we die ■ Whole Life Assurance -This is an insurance policy which we pay so that our family will be protected financially when we die ■ Endowment Policy -The insurance company will make a payment either when you die or at a certain date – this operates like a __________ ■ Endowment Policy -The insurance company will make a payment either when you die or at a certain date – this operates like a savings plan
Average Clause ■ If a property is only partially insured and if a risk occurs – there will only be partial compensation paid out ■ E. G. A house is worth 300, 000 and only insured for 200, 000 A fire occurs, and causes 60, 000 damages Formula: Sum Insured X damages = Total Value = 200, 000 X 60, 000 300, 000 2 X 60, 000 = 40, 000 … Compensation due 3
Do this example ■ Mary’s car is worth 50, 000 ■ She insures it for 30, 000 ■ An accident occurs and 20, 000 worth of damages are caused ■ WHAT COMPENSATION DOES SHE GET?
Excess Clause ■ This means that the insured person must suffer some of the loss themselves before compensation is paid ■ E. g. In a previous example if an excess clause of 100 euro existed, Mary would have to pay the first 100 euro herself and so the compensation would be…. ■ 40, 000 – 100 = 39, 900
Importance of Having Insurance ■ Protects savings of households and businesses if claims are made or damage occurs ■ Businesses can invest in the growth of the business and let the insurance cover the risks ■ Households and businesses can replace assets and continue in business in the event of accidents occurring e. g. fire ■ People can plan for and protect themselves into the future e. g. health insurance, children’s education, pension ■ Businesses can protect the well-being of customers and employees in the event of accidents occurring e. g. product liability, employer liability, public liability
Reducing the Cost of Insurance ■ Install fire alarms, fire extinguishers, sprinklers etc. ■ Install burglar alarms ■ Partially Insure large items ■ Avoid small claims ■ Avoid accidents by – providing protective clothing, training, equipment
True of False 1. Insurance is for something that WILL happen 2. Assurance is for something that might happen 3. A proposal form is an application form for insurance 4. The premium is the amount of money we pay for insurance 5. The policy is the application form for insurance 6. The insured is the person who pays the premium 7. The insured takes out insurance 8. The insurer is the insurance company
Pick the odd one out 1. Insurance agent, broker, assessor, 2. Uberimmae Fidei, Utmost goodfaith, Indemnity 3. Insurable Interest, Utmost good faith, policy, 4. Policy, Premium, Proposal Form, 5. Whole Life assurance, Term Assurance, Car Insurance
True or False 1. 2. 3. 4. 5. The actuary calculates the premium The actuary calculates the risk of something happening Loosing the Wimbledon final is a non-insurable risk The assessor calculates the compensation The insurance broker sells insurance from lots of different companies 6. The insurance agent shops around and gets the best policy for you 7. Utmost good faith means you cannot make a profit on insurance 8. Uberimmae fidei means utmost good faith
Fill in the blank 1. Third party insurance does not insure the car owned by the ________ 2. The Insurance company is known as the _______ 3. The ______ calculates the premium 4. __________ means you can only insure something when you gain by its existence and suffer by its loss 5. Uberimmae Fidei means _________ 6. An Insurance _______ sells insurance from one company 7. ___________ car insurance is the most
Fill in the blanks 1. VHI is an example of a company that provides ________ insurance 2. Fidelity guarantee protects us against dishonest ____ 3. _______ insurance protects us against loss of profits if our business is closed as a result of fire or flood 4. An insurance _______ sells insurance from lots of different companies 5. ________ means we must tell the truth on the application form for insurance 6. _________ means the insurance company can try to sue a third party if they caused an accident for which the insurance company had to pay insurance 7. Car insurance and _________ are required by law i. e. you have to have these types of insurance