Insurance Protection against a loss you hope will not happen

Insurance

• Insurance

• Protection against a loss you hope will not happen.

• Eg. car accident.

You must cover all possible risks.

• You must cover all possible risks.

• Eg. In household insurance: fire, theft, flood and accidental damage.

• You must insure enough to cover full amount of loss.

• Eg. If your house is worth €200,00 you must insure it for that value.

Insurable risk

• Insurable risk

• Things that can be insured.

• Eg.

• Houshold insurance; fire theft, damage.

• Personal accident for a farmer.

Exclusion Clause:

• Exclusion Clause:

• Situations that cannot be insured.

• Eg.

• Household insurance:

• A house situated near a river that is known to flood every year.

Policy Excess/Excess Clause:

• Policy Excess/Excess Clause:

• The insured person may have to pay the first €100 of the compensation themselves.

• This is to reduce the number of small claims being made.

• To make people more careful.

Proximate Cause:

• Proximate Cause:

• What is the exact cause of the loss.

• Eg. was it fire or theft or flood?

• ie. what actually happened?

• This helps the insurer decide if compensation is due.

Compensation:

• Compensation:

• Is the money you get when you make a claim.

Insurable Interest

• Insurable Interest

• Utmost Good Faith

• Indemnity

• Contribution

• Subrogation

In order to insure something you must benefit from its existence & suffer from its loss.

• In order to insure something you must benefit from its existence & suffer from its loss.

• Eg. You can insure your own house but you cannot insure your neighbours’s house.

You must tell all relevant information when filling out an application for insurance.

• You must tell all relevant information when filling out an application for insurance.

• Eg. If you have an illness you must tell the ins. co. as they may want to charge a higher premium or not insure you at all.

You cannot make a profit from insurance.

• You cannot make a profit from insurance.

• There is no point in insuring your house for more than it is worth as the ins. co. will only compensate you for the actual value of the house.

If a risk is insured with two insurance companies each will pay half of the compensation.

• If a risk is insured with two insurance companies each will pay half of the compensation.

• Eg: A ring insured with two ins. co.’s. for €1,000

• Both will give ??

• €500 each.

Passes the legal right of the insured over to the insurer to claim from a third party who caused the loss.

• Passes the legal right of the insured over to the insurer to claim from a third party who caused the loss.

• Eg. Whirlpool oven causes house to go on fire. Ins. co. pays compensation to insured and then seeks their own compensation from whirlpool.

Related to underinsurance and partial loss.

• Related to underinsurance and partial loss.

• If you only insure an item for a fraction of the value, you only get the same fraction compensation.

• SUM INSURED x CLAIM = COMPENSATION

• ACTUAL VALUE

Mary insured her house for €200,000.

• Mary insured her house for €200,000.

• The market value is €250,000.

• A fire causes €10,000 worth of damage.

• How much compensation will she receive???

• 200,000 x 10,000 = 8,000

• 250,000

Proposal Form

• Proposal Form

• Application form for insurance

Policy

• Policy

• Contract of insurance

• Gives full details of cover

• Must be filled away safely

Cover Note

• Cover Note

• Temporary policy

• Used in car insurance, while you are waiting for insuracne disc

Certificate of Insurance

• Certificate of Insurance

• Proof of insurance

Claim Form

• Claim Form

• Form you fill out when a loss occurrs and you want compensation

Broker

• Broker

• Gives advice on insurance

• Sells insurance on behalf of lots of companies.

• Eg:

Agent

• Agent

• Sell insurance for only one co.

• Eg: FBD, Quinn Direct……..

Actuary

• Actuary

• Calculates insurance premiums

Loss Adjuster

• Loss Adjuster

• Calculates the value of the loss

• Works for the insurance co.

Loss Assessor

• Loss Assessor

• Calculates the value of the loss

• Represents the insured

Decide what risks you want covered. (ask a broker)

• Decide what risks you want covered. (ask a broker)

• Fill out proposal form. (ugf)

• Pay your premium.

• File your policy in a safe place.

Contact guards & ins. co.

• Contact guards & ins. co.

• Obtain estimates of lost/stolen items.

• Fill out claim form. (ugf)

• Talk to assessor and agree on compenstaion.

The cost of insurance

• The cost of insurance

• Money you pay to be insured

• The higher the risk the higher the premium

Things that cause premiums to be high or low

• Things that cause premiums to be high or low

• Eg: In car insurance

• No car accidents = lower premium

• Under 25 male = higher premium

Extra premium for higher risk

• Extra premium for higher risk

• Eg: A smoker will have a higher premium for life assurance than a non smoker

Money taken off premium for a lower risk

• Money taken off premium for a lower risk

• Eg: In house insurance you get a discount for having an alarm

In car insurance you get a discount if you do not claim for any accidents the previous year

• In car insurance you get a discount if you do not claim for any accidents the previous year

• It encourages people not to claim for small amounts

The date you must have your premium paid by.

• The date you must have your premium paid by.

• Eg : 1/10/08

You may be given a few extra days to pay your premium

• You may be given a few extra days to pay your premium

• Not allowed in motor insurance

Pay Related Social Insurance.

• Pay Related Social Insurance.

• Statutory Deduction from you salary.

• You will receive an income if you are out of work due to illness, disabiity, maternity leave…

In case you get sick or need an operation

• In case you get sick or need an operation

• Eg: VHI

• Voluntary Health Insurance

Covers people who are injured due to an accident.

• Covers people who are injured due to an accident.

• Lump sum payment for loss of finger, sight, hearing etc.

Provides an income in case you can’t work due to illness.

• Provides an income in case you can’t work due to illness.

• Will provide you with a higher income than PRSI only.

• Provides you with lump sum and income for your retirement.

Provides you with health care if you get sick on holidays.

• Provides you with health care if you get sick on holidays.

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• Older, smoker, risky job

• Discount

• Younger, non-smoker,

• low risk job