Explain any four of the insurance terms underlined above - Leaving Cert Business - Question A - 2018

1. Premium - This is the fee paid for insurance to cover the risk by the policyholder to the insurance company. The amount is calculated by actuaries, who assess various factors including the applicant's history and the type of coverage sought.

2. No Claims Bonus - This is a reduction or discount in a policyholder's premium for not making a claim during the specified period, often up to five years. For instance, a policyholder can receive a 50% reduction in their premium for having no claims in the last five years.

3. Loading - This refers to an extra charge, fee, or cost added to the standard premium for higher risk drivers. For example, young motorists may face a loading due to their perceived risk, given that they are statistically more likely to be involved in accidents.

4. Insurance Policy - This is a formal contract between the insurer and the insured which defines the terms and conditions of the coverage. It specifies what risks are covered, the amount insured, and the obligations of both parties involved in the agreement.