Business

Insurance

Insurance

Insurance offers financial protection against possible loss and is designed to place the insured person back in the same financial position they were in before the loss occurred.

Premium is the amount charged by an insurer in return for providing insurance cover for a particular risk.

Compensation is a payment made to an insured person if they suffered an insured loss.

$\frac{\text{Insured Value}}{\text{Actual Value}} \times \text{Amount Claimed}$

Insurance = If = If (an) loss occurs Car crash happens Injury occurs

Assurance = When (sure) = Life assurance paid out on death

An insurance write-off means that the cost of repairing the damaged item is greater than the item's replacement value.

Loading: An extra amount added to the basic premium to cover increased risk → smoker long-term illness

EG: $\frac{200,000}{250,000} \times €20,000 = €16,000$

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Principles of Insurance

Principle	Insurable Interest	Utmost Good Faith
Definition	You have to own the item to get insurable interest on it. You must suffer a financial loss without it.	Applying for insurance yu must be honest and fill out all forms truthfully.
Example	House and car can get insurable interest because you own them and suffer a financial loss without then (can't get 'if' on your neighbours → don't own them)	Not declaring penalty points

Principle	Indemnity	Subrogation
Definition	Cannot profit from a claim	When you claim on the insurance, the company now owns the insured object.
Example	If a car is valued at €10,000, the maximum amount of compensation is €10,000	If you make a claim after a car crash, you cannot sell the carpets for scrap metal as you no longer own the car.

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Insurance

Principle	Contribution
Definition	When you insure something w/2 different companies, you can only claim the full amount from one, or half from each insurance company.
Example	Car worth €20,000 insured with AVIVA and FBD. You only claim off one/or half from both, as you can't profit from insurance.

Life Insurance

Term Policy: For a fixed time period, covers the duration of the loan of mortgage - the outstanding amount is paid off

Whole-life policy: Pays compensation on death of the insured person (day of death)

Endowment Policy: Pays a guaranteed amount on a specific date or if sooner, death of person.

Motor Insurance

Motor insurance is compulsory in Ireland. Required by law It is a criminal offence to drive without motor insurance

Third-Party: Covers injury to another person or vehicle caused by the insured driver. Does not cover the policyholder or their vehicle.

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Insurance

Third-Party, fire and theft: Third party and insured person's vehicle for fire or being stolen

Comprehensive: All parties vehicles that suffer loss in an accident → including insured person and their car.

First Party: Person who takes out the insurance
Second Party: Insurance company 1st party is with
Third Party: Any person / item (vehicle, property) that suffers a loss caused by the first party.

Home Insurance (Buildings Cover):

Covers against fire, flood, or storm damage.
→Structure (only outside, nothing inside)

Home Contents Insurance

Covers contents against fire, flood, burst pipes and burglary.

Jobs in the Insurance Sector

Insurance broker: Helps find the best fit for needs and budget. Searches the market to find the best policy and price. Paid commission for policies sold.

Agent: Sells policies on behalf of one company.

Actuary: Decides on premium, based on risk of claim being made

Loss Adjuster: Investigates a claim and decides if the claim is covered. Recommend amount of compensation to be paid.

Risk: How likely a person is to make a claim

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Business

Insurance

Policy Excess:

Amount the insured person must pay for any loss or damage to the insured item. The insurance company pays the balance.

Exclusions: Specific items or risks that are not insured.

MAKING A CLAIM:

Must complete a claim form:

• Why seeking compensation.
• Details of how the loss occurred and the amount being claimed.