Insurance

Ms. Tiernan

Ms. Tiernan

Insurance

“Insurance is a service people can purchase that compensates them for a financial loss” (www.skoool.ie)

Ms. Tiernan

The person who wants to be insured pays a premiumPremium will be higher if loadings are added e.g.

if you were in a 2 crashes last year the risk of it happening again will be higher)

Premium will be lower if deductions are applied e.g. if you travel less than 15,000 km per year there’s less chance of you crashing

In return the insurance company promises to pay compensation if a financial loss occurs

Ms. Tiernan

Risks

Risks are insurable when:Person taking out insurance gains financially from its existence & suffers from its lossThe loss is accidentalThere are a large number of similar risks being insured againstPossible loss is not so large as to ruin the insurance company

Ms. Tiernan

Forms

Proposal Form – Completed when taking out insuranceSample Proposal Form

Claims Form – Completed when making a claim for compensationSample Claim Form

Ms. Tiernan

Ms. Tiernan

Ms. Tiernan

Principles of Insurance

3 main principles govern insurance

Insurable Interest

Utmost Good Faith

Indemnity

Ms. Tiernan

Insurable Interest – Person who wants to take out insurance must gain financially from existence of what's being insured and suffer from its loss

Ms. Tiernan

Utmost Good Faith – Person applying for insurance must truthfully answer all the questions

Failure can result in insurance being worthless

Ms. Tiernan

Indemnity – The insured person cannot make a profit from insurance – Two sub-principles:

Principal of Contribution – If same risk insured by two or more insurance companies compensation is shared between them

Principal of Subrogation – Once insurance company pays out compensation it becomes the owner of the item insured

Note: Underinsurance e.g. if you insure your house for €100,000 but it was actually worth €150,000 you will only receive the €100,000 if it’s burned down

Ms. Tiernan

Types of Insurance taken out by households

Personal Insurance

House Insurance

Life Assurance

Motor Insurance e.g. Third Party

Comprehensive

Ms. Tiernan

Types of Insurance taken out by businesses

Fire Insurance

Employers’ Liability Insurance

Product Liability Insurance

Burglary Insurance

Ms. Tiernan

Types of Insurance taken out by businesses continued

Public Liability

Motor Insurance

Glass & Business Signs Insurance

E-commerce Insurance

Ms. Tiernan

Insurance People

Actuary – Calculates the insurance premium

Assessor – Calculates compensation to be paid

Ms. Tiernan

Practice calculating insurance premiums!