Insurance Notes PDF

Lesson 1 ======== **Insurance** is a written agreement stating that an insurance company will pay money to a person who has suffered a loss or injury. Key People ---------- - The **insurer** is the insurance company providing the insurance e.g. Aviva, Axa, VHI. - Principles of Insuranc...

Lesson 1 ======== **Insurance** is a written agreement stating that an insurance company will pay money to a person who has suffered a loss or injury. Key People ---------- - The **insurer** is the insurance company providing the insurance e.g. Aviva, Axa, VHI. - Principles of Insurance ----------------------- **Principle** **Description** **Example** -------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------ Utmost good faith Must disclose all [material] facts when applying for insurance If you have penalty points or have been in an accident before Insurable interest The insured must gain from an item's existence and suffer financially from its loss You cannot insure your neighbour's car Indemnity A person cannot profit from insurance If you crash a car worth €10,000 you cannot receive more than €10,000 from your insurer Subrogation Rights to recover losses transfer to insurance company after the insured is fully compensated by them If the insurance company pays you the full value of your car, they now own the car. Contribution If more than one insurance company is required, any pay-out is proportionally divided If you insure with two insurers, paying an equal premium to both, they will each pay you half of the claim Lesson 2 ======== Types of Insurance ------------------ **Health Insurance** -- protects against personal illness or injury, by paying compensation for medical bills. **House and contents Insurance** -- protects against damage to a house caused by fire, flood or storm and against loss or damage to contents caused by theft, fire or flood. **Motor insurance** -- Protects against loss or damage if an employee being involved in a car accident. It is compulsory by law. *There are three types:* - - - **Mortgage Protection Insurance** -- protects against the loss of home due to ill health, redundancy or death. The insurance company pays the mortgage payments. **Gadget insurance** -- protects against the loss or damage of devices. Lesson 3 ======== Insurance vs. Assurance ----------------------- - - **Life Assurance** - protects the people who are financially dependent on the insured person. There are 2 types: 1. 2. Jobs in the insurance industry ------------------------------ - - - The **benefit of insurance** is that the insured is [protected from financial loss] if an incident occurs. This provides [financial security] and [peace of mind]. Getting Insurance ----------------- - An **insurance proposal form** is completed by the applicant giving all relevant details of the risk against which the insurance protection is needed. The company uses this to calculate the amount of premium to be paid. - The **insurance policy** is the contract between the insured person/business and the insurer (insurance company), detailing all the terms and conditions of the insurance cover. - A **premium** is the fee paid to the insurance company by the insured to cover the risks. - **No claims bonus** is a discount on insurance for every year the insured does not make a claim. - **Compensation** is the money the insured receives from the insurer if their claim is successful. - To claim compensation, the insured must complete a **claim form**. This gives details of the incident and allows the insurer to assess the validity of your claim. - There may be a **policy excess** when making a claim. This is a part of compensation that is [not paid] by the insurance company. It's used to reduce the number of small claims made. Lesson 4 ======== Factors that impact the size of insurance premium ------------------------------------------------- 1\) **Level of risk** -- Higher the risk, higher the premium. - - 2\) **Value of the item** -- higher the value, higher the premium. 3\) **Number of previous claims** -- having more claims makes you a higher risk Reducing Risk to Reduce your Premium ------------------------------------ - Install a smoke and/or fire alarm in your home - Install an intruder alarm in your home - Install an alarm in your car - Do not smoke - Take regular exercise to stay healthy - Drive carefully, wear your seatbelt and get your car serviced regularly **Underinsured** means the insured has [failed to insure for the full value of the policy]. In the event of a claim underinsurance may result in financial losses for the insured. Lesson 5 \*print\* ================== Calculating Premiums -------------------- **Formula:** Basic premium + loadings -- deductions = total premium Average clause -------------- The **average clause** applies if an item is underinsured. The claimant can only receive a portion of the claim because they have only insured a portion of the asset. **Formula:** [Amount Insured] x Loss/Damage = compensation received Value of the Asset Contribution Calculation ------------------------ If you insure with more than one company, contribution states that the companies must only pay out a portion of the compensation in the ratio in which you were insured with each company. **Formula:** [Loss/Damage] = compensation received from each company No. of Insurers Policy Excess ------------- The part of compensation that is **[not paid]** by the insurance company. **Formula:** Damage/loss -- policy excess = compensation received.