unit 3 Managing a Business and a Household: Insurance

What is risk management?

Risk management is identifying potential risks, assessing their impact, and taking steps to minimize them.

What are some ways to reduce risk?

Installing alarms, providing safety training, appointing a safety officer, following health and safety rules, and taking out insurance.

What is insurance?

Insurance is financial protection against possible loss, where the insured pays a premium in exchange for compensation if a loss occurs.

What is a premium?

A premium is the amount paid to an insurance company for coverage against potential risks.

What is a proposal form?

A proposal form is an application for insurance where the insured provides details about the risk to be covered.

What is a claim form?

A claim form is a document submitted to an insurer when the insured suffers a loss and requests compensation.

Who is the insured?

The insured is the person or business that takes out an insurance policy.

Who is the insurer?

The insurer is the insurance company that provides coverage and pays compensation for covered risks.

What is a policy excess?

A policy excess is the amount of any claim that the insured must pay before the insurance company covers the rest.

What is an insurance policy?

An insurance policy is a legally binding contract that outlines the terms and conditions of the insurance coverage.

What is a renewal notice?

A renewal notice is a document sent to remind the insured that their policy is due for renewal.

What is a cover note?

A cover note is temporary proof of insurance until the full policy is issued.

What are the five principles of insurance?

Insurable Interest, Utmost Good Faith, Indemnity, Contribution, and Subrogation.

What is the principle of insurable interest?

The insured must own the item being insured and suffer financially from its loss.

What is the principle of utmost good faith?

The insured must provide all relevant and truthful information when applying for insurance, even if not asked.

What is the principle of indemnity?

The insured cannot make a profit from insurance; compensation only covers the actual loss.

What is the principle of contribution?

If the same item is insured with multiple insurers, each insurer shares the compensation costs proportionally.

What is the principle of subrogation?

Once compensation is paid, the insurer takes ownership of the damaged item and legal rights related to it.

What formula is used for the average clause (indemnity)?

(Amount Insured ÷ Actual Value) × Claim Amount = Compensation Paid

What formula is used for contribution (multiple insurers)?

(Amount Insured with One Insurer ÷ Total Amount Insured) × Claim Amount = Compensation from Each Insurer

Why is motor insurance compulsory?

It is a legal requirement to ensure that damages caused to third parties are covered in case of an accident.

Who are the three parties in motor insurance?

The insured (vehicle owner), the insurer (insurance company), and the third party (injured party in an accident).

What are the three types of motor insurance policies?

Third-party, Third-party fire and theft, Comprehensive.

What does third-party motor insurance cover?

Covers injury and property damage caused by the insured but does not cover their own vehicle.

What does third-party, fire, and theft motor insurance cover?

Covers third-party damages, plus fire damage and theft of the insured’s vehicle.

What does comprehensive motor insurance cover?

Covers all losses, including accidental damage to the insured’s vehicle.

What is PRSI?

Pay Related Social Insurance is a compulsory contribution paid by employees and employers to fund social welfare benefits.

Who pays PRSI in a household?

Employees pay PRSI from their wages to contribute to state benefits like pensions and Jobseeker’s Allowance.

Who pays PRSI in a business?

Employers pay PRSI contributions for each employee, in addition to their salaries.

What is health insurance?

Covers medical expenses such as hospital fees, doctor visits, and surgeries.

What is mortgage protection insurance?

Covers mortgage repayments if the insured cannot pay due to illness or redundancy.

What is income protection insurance?

Pays a percentage of the insured’s salary if they cannot work due to illness or injury.

What is personal accident insurance?

Pays out if the insured suffers a severe injury or disability.

What is travel insurance?

Covers lost luggage, flight cancellations, and medical emergencies while traveling.

What is identity theft insurance?

Protects against financial losses caused by stolen identity or fraudulent transactions.

What is life assurance?

Pays a lump sum to a named beneficiary when the insured dies.

What are the three types of life assurance?

Whole Life Policy, Term Life Policy, Endowment Policy.

What is a whole life policy?

The insured pays premiums for life, and the policy pays out upon death.

What is a term life policy?

The policy lasts for a fixed term and only pays out if the insured dies within that period.

What is an endowment policy?

The policy pays out at a specific age (e.g., retirement) or upon death, whichever happens first.

What is product liability insurance?

Covers claims from customers injured or made ill by faulty products.

What is public liability insurance?

Covers claims from members of the public who are injured on business premises.

What is employer’s liability insurance?

Covers claims from employees who suffer injuries, illness, or accidents at work.

What is key personnel insurance?

Covers the financial loss if an essential employee leaves, falls ill, or dies.

What is fidelity guarantee insurance?

Covers financial losses due to employee fraud or dishonesty.

What is consequential loss insurance?

Covers lost income if a business is forced to close due to an insured event.

What is cash in transit insurance?

Covers theft of cash while being transported to or from the business.

What is plate glass insurance?

Covers large shop windows against damage or vandalism.

What are the similarities between household and business insurance?

Both insure property, contents, PRSI, require truthful proposal forms, and review policies regularly.

What are the differences between household and business insurance?

Businesses face more risks, pay higher premiums, must insure employees, and can deduct premiums as business expenses.

Why is insurance important?

Provides financial protection, meets legal requirements, reduces risks, and helps businesses and households plan for unexpected losses.

What are loadings in an insurance premium?

Extra charges added to the basic premium due to increased risks, such as a young driver or high-crime area.

What are discounts in an insurance premium?

Reductions in the premium for lower risks, such as having no prior claims or installing security alarms.

What is the process of getting insurance?

1. Contact an agent or broker 2. Fill out a proposal form 3. Actuary calculates the premium 4. Policy is issued 5. Claim if a loss occurs 6. Receive compensation.