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This is an Insurance and People at Work question - Junior Cycle Business Studies - Question 6 - 2018
Question 6
This is an Insurance and People at Work question. Answer all parts of this question: Sarah White, who was born on 17 August 1994, lives at Main Street, Dundrum, Co... show full transcript
Worked Solution & Example Answer:This is an Insurance and People at Work question - Junior Cycle Business Studies - Question 6 - 2018
Step 1
Explain the difference between third party and comprehensive insurance cover.
Answer
Third party insurance provides compensation to others for injuries or property damage caused by the insured vehicle. In Sarah's case, it covers compensation for injuries to other people involved in an accident and damage to property, but it does not cover any damage to Sarah's own car.
Comprehensive insurance, on the other hand, offers broader protection. It covers damage to Sarah's car as well as compensation for injuries caused to other individuals and property. Essentially, it safeguards Sarah's financial interests in the event of an accident, whether she is at fault or not.
Step 2
State and explain the principles of insurance of which Sarah needs to be aware when taking out motor insurance.
Answer
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Utmost Good Faith: Sarah needs to disclose all relevant information when applying for insurance. Failing to do so could lead to the insurance being invalidated.
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Insurable Interest: Sarah must have a financial interest in the car she is insuring. If damage were to occur, she must stand to lose financially. As she owns the car, this principle is satisfied.
Step 3
Explain the following terms, with reference to Sarah:
Answer
a) Loadings: Loadings refer to additional charges on the premium due to higher risk factors. Since Sarah is a new driver with no claims history, her premium will likely be higher because insurers view her as a higher risk.
b) Premium: This is the amount Sarah pays for her insurance coverage. The premium will be influenced by factors such as loadings, the type of coverage selected, and Sarah's driving experience.
c) No claims bonus: This is a discount applied to the premium for each year that the insured has not made a claim. Since Sarah has no previous insurance claims, she is not entitled to a no claims bonus, which could otherwise reduce her premium substantially.
Step 4
Step 5
Step 6
Outline the purpose of each of these statutory deductions.
Answer
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PAYE: This deduction is used to fund the government’s expenditure on public services and infrastructure.
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PRSI: This deduction contributes to various social welfare benefits such as health services, pensions, and unemployment benefits.
Step 7