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It is important that a business identifies, assesses and tries to reduce risks before taking out insurance - Leaving Cert Business - Question 4 - 2008
Question 4
It is important that a business identifies, assesses and tries to reduce risks before taking out insurance. (A) Outline four different types of insurance policies y... show full transcript
Worked Solution & Example Answer:It is important that a business identifies, assesses and tries to reduce risks before taking out insurance - Leaving Cert Business - Question 4 - 2008
Step 1
Outline four different types of insurance policies you would expect a factory to have.
Answer
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Public Liability Insurance: This covers claims made by the public for bodily injury or property damage caused by the business.
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Employer's Liability Insurance: This policy provides coverage for claims made by employees for injuries or illnesses suffered as a result of their work.
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Fidelity Guarantee: This offers protection against losses due to employee dishonesty or fraudulent acts.
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Burglary/Theft Insurance: This type of insurance protects against the loss of property due to burglary or theft.
Step 2
Outline three ways in which a manager can reduce risks in a factory.
Answer
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Health and Safety Training for Staff: Regular training ensures that employees are aware of safety protocols and can operate equipment safely.
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Security Systems: Installing security alarms and locks can deter unauthorized access and theft.
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Fire Alarms and Sprinkler Systems: Implementing fire safety measures protects both personnel and property from fire damage.
Step 3
Name and explain the functions of two documents commonly used in insurance.
Answer
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Proposal Form: This document is filled out by the applicant to provide necessary information about the risk being insured. It is essential for the insurer to assess the risk and determine the policy terms.
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Claim Form: This is used by the insured to apply for compensation after a loss has occurred. It details the nature of the claim and allows the insurance company to assess liability.
Step 4
Explain the following three principles of insurance.
Answer
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Insurable Interest: This principle states that the insured must have a legitimate interest in the subject of the insurance policy, meaning they stand to suffer a loss if it occurs. For example, a factory owner insures their equipment because damage would directly affect their business.
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Utmost Good Faith: This requires both parties in the contract, the insurer and the insured, to act honestly. An insurer must disclose all necessary information about the policy, and similarly, the insured must provide accurate details about the risk being covered.
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Indemnity: This principle assures that the insured is compensated for their loss without profiting from the insurance. For example, if a machine worth $10,000 is damaged, the compensation should fully reflect the loss but not exceed that amount.