Insurance protects individuals and businesses from financial loss by paying compensation for damage to or loss of valuable property and assets. It works by pooling risks among many policyholders, so that the costs of claims made by a few are shared among all. There are important principles that govern insurance, such as insurable interest, utmost good faith, indemnity, contribution, subrogation and average clauses.

1. •People insure things that are
valuable to them and that would
cost a lot of money to replace if
they were stolen or damaged in
some way

2.  Insurance is a way of protecting ourselves
financially by arranging for the payment of a
sum of money in the event of loss or injury
occuring.

3.  Cover all possible risk
 Be enough to cover the loss that might occur
e.g. if a house is worth €100,000 it should be
insured for €100,000, and not for less
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4.  Example of Motor Insurance
 Not everyone’s car will be stolen or damaged
so the money paid to the insurance company
is used to pay a small % of people whose cars
are stolen or damaged
 This is known as the Pooling of risk

7. 1. Calculate the value of the item you wish to
insure
 2. Contact an insurance company
 3. Complete the proposal form

8.  4. When the insurance company accepts the
proposal for insurance, you must pay the
premium.
 5. Within a couple of weeks, the insurance
company will send the insurance policy
and certificate of insurance to you.

9.  Personal
 Home
 Life
 Motor Vehicle

10.  By law every person who drives a car must
have insurance.
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 http://allianz.ie/car-insurance/

11. Third party, fire Compensates the insured in
and theft the case of the car going on
fire or being stolen
Comprehensive This gives third party, fire
and theft cover, as well as
accidental damage, which
gives compensation for
damage to the motorist’s
own car

12.  If you have no accidents or claims made
during the year, you will receive a discount on
your premium for the next year. This is
known as a no claims bonus

13. House Insurance Covers the house against damage
by fire or break in. It is very
important that the insurance cover
is adequate
House Contents This gives compensation if
household contents are stolen or
damaged, e.g. furniture, clothes
etc
All Risks All risk insurance gives wider cover
than that given by house contents
insurance.

14. Medical insurance This covers the cost of doctors and
hospitals in time of illness. E.g.
VHI and Aviva
PRSI The State insurance covers people
who are out of work through
illness or unemployment
Holiday Insurance This gives compensation in the
event o a holiday having to be
cancelled, a person becoming ill
on holiday or goods being stolen
while on holiday

15. Whole Life This guarantees to pay an agreed
Assurance sum of open to the dependents
when the insured person dies
Temporary life Provides cover for an agreed
(Term) Assurance period of time, e.g. up to 65
Endowment to pay an agreed sum on the
Assurance death of the insured person, or
on the insured person reaching a
certain age, whichever comes
first

16.  Assurance differs from insurance in two
ways:
1. In insurance there is the possibility of
the event happening, whereas in life
assurance, there is a certainty that a
person or reach a certain age
2. Insurance is taking out on an annual
basis whereas life assurance is taking
out over a definite number of years

17. 1. Insurable Interest:
People can only insure something where they benefit
from having the item and it would cost you money to
replace it if it was robbed or stolen, e.g. Your house
Your House Neighbours
House

18. 2. Utmost good faith: Answer all questions
truthfully and provide all relevant information
to the insurance company. E.g. Insurance
company may refuse to pay a claim for a
house fire, because it was not told that the
roof was thatched.

19. 3.Indemnity: This rule states you should not
make a profit from insurance.

20. 4. The principle of Contribution: If a risk is
insured by two or more insurance
companies, any compensation payable
will be shared between the companies.
Eg. Camera stolen on holidays. – house
and holiday insurance policy.

21. 5. The principle of Subrogation: Insurers, who pay
out full compensation for an item which they have
insured, are entitled to take possession of the item
and sue a third party.
subrogation – linked to indemnity.

22.  Average Clause: Besides the five principles
there is another important rule in insurance,
called the average clause. This states that if
something is insured for only a proportion of
its value, for example, half of its value, the
insurer is only liable for the same proportion
of the loss, i.e. half, when a claim is made.

24.  There may be a legal requirement to do so.
E.g. PRSI, Motor Insurance.
 Insurance may be required as a condition for
getting a loan.
 To protect against the risk of serous financial
loss.
 To give the insured person peace of mind.

25. 1. Loss of profit due to sudden increases in the cost
of production
2. Loss of profit due to strikes
3. Loss of profit due to changes in consumers’ tastes
and fashions
4. Loss of profit due to the entry of new rival firms
into the industry
5. Loss of profit due to the adverse effects of new
legislation
6. Loss of profit due to adverse effects of
international trade agreements before the trade
agreement
7. Loss of profit due to bad management

26.  Install security devices
 Security Procedures
 Training Staff
 Maintenance of Car
 Careful Driving

27.  http://www.youtube.com/watch?v=-
c_zppq6YfQ&feature=related

28. Insurance broker Utmost good faith
Days of Grace Indemnity
Proposal form Subrogation
Premium Contribution
Insurance policy Non insurable risk
Cover note Exclusion clause
Renewal notice Policy Excess
Insurable interest Surrender Value
Comprehensive motor False Economy
insurance
Certificate of insurance Insurer
No claims bonus Assessor
Actuary Loadings