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JC: Insurance

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R. Averill

on 25 September 2016

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Transcript of JC: Insurance

David Beckham - in 2006,
he insured himself for £100 Million
The insurance policy covers Beckham in the event of injury, disfigurement or serious illness
Michael Flatley - "Lord of the Dance"
Had his legs insured for $40 Million
Bruce Springsteen - Singer/Musician
Voice insured for $3.5 million
Insurance:
Before we begin,
I want to hear
what you know
about Insurance
On Schoology, add to
the discussion topic
"What do you think Insurance means?"
“Insurance is an agreement between a person who is afraid of a loss (the Insured) and a company (the Insurer). In return for a fee, the insurance company will compensate the individual IF a loss occurs”
Official Definition
How Insurance Works:
A Simple Example






Imagine there are 50 Car owners in a Town
Each Driver is worried about crashing their Car and having to pay for a replacement or repairs
So each Driver buys an insurance policy from an INSURANCE COMPANY.
The Insurance company then has a “pool of money”
Now out of the 50 Drivers, How many do you think
will have an ACCIDENT/CRASH ?
Only a very small amount of the 50 drivers will have an accident.
The Insurance Company will pay
compensation (money)
to those drivers who had Accidents.

They will be "compensated" for their loss. This means their financial loss will be covered.
The Insurance Company has enough money in their "pool" to pay the compensation of those Drivers who crashed. They also need to make a PROFIT.
A Picture of Insurance
What Insurance Companies do you know of?
Activity: I want you to think of things that can be insured.


As many things as you can think of... MAKE A LIST
**The Principles of Insurance** (Very Important)
There are 5 Key Rules or Principles in the insurance business
The Price the drivers pay is called a "Premium"
We all own things that are important to us and have value to us.
However! Things can go wrong and accidents can happen
Insurance offers people protection against these accidents. It gives them "financial peace of mind"
You must know these well!
1. Principle of Insurable Interest:
To be able to insure something,
you must gain financially by its existence
and
suffer financially by its loss
You can only insure your own Car/House/Computer/Belongings
Can you insure your Neighbour's house?
?
Why Not?
2. Principle of Utmost Good Faith
The Person seeking insurance must always tell the truth when applying for Insurance
You must give all relevant facts to the insurance company.
For Example: If you are applying for Car Insurance, you must provide truthful information such as:

1. Age of Driver
2. Previous Record (any penalty points?)
3. Previous Driving Record (Accidents?)
4. Eyesight?
5. Medical Problems?/Disabilities?
6. Full Licence?
Why do you think
you must tell the truth?
3. Principle of Indemnity
Strange Word, but a simple meaning
"You can not make a profit from Insurance"
The compensation that you receive
will
only be equal
to the value/worth of the item
at the time of loss/damage





Example:
Your Car is worth €10,000
You have an accident and the car is "written off".
The compensation paid will be €10,000, no more.
4. Principle of Subrogation
SUBROGATION:

Once the insurance company has
paid compensation
, they h
ave the right to sue the person responsible for the damage
and
take the damaged item for scrap value.
Let us look at an Example
A truck driver crashes into your parked car
The Truck Driver's insurance company pays you compensation for your car.
Once they have paid you, they own
the wrecked car, and they may sell it for scrap parts & metal.

They also have the right to sue the truck driver if he was Drink Driving or driving Dangerously/without a licence
5. Principle of Contribution
If you insured your car fully with 2 or more different insurance companies, you will not get double the compensation, they will share the cost
The insurance companies check claims with other insurance companies.
EXAMPLE:
A man insures his house (worth €200,000) with
Aviva
for the full amount €200,000.
He also insures his house with
Quinn Insurance
for its full value(€200,000)
If the house burns down, how much compensation will he receive?
Indemnity
means he cannot make a profit from insurance
He receives €100,000 from Aviva, and €100,000 from Quinn

They both "Contribute" to return him back to the financially
situation he was in before.
Insurance Quotations:
Some Mathematics!
You want to get House Insurance
Your House is worth €200,000
and the contents are worth €50,000




You contact 2 different Insurance Companies
to get insurance Quotes
When you are getting house insurance, you usually
insure the House itself
and
also the House Contents (TV, computer, furniture etc)
Aviva:

House: Costs €3 per €1,000 of House Value
Contents: Costs €4 per €1,000 of Contents Value
So lets work it out:

House is worth €200,000
Contents are worth €50,000
House: 200 x €3 = €600
Contents: 50 x €4 = €200

Total Premium is €800
Axa Insurance:
House: Costs €4 per €1000 of House Value
Contents: Costs €3 per €1000 of Contents Value
House is worth €200,000
Contents are worth €50,000
House: 200 x €4 = €800
Contents: 50 x €3 = €150

Total Premium is €950
Aviva premium is €800
Axa Premium is €950
Choose Aviva for your Insurance Cover!
There is a detailed example of
one of these done on Page 109
Lets Try one!
House is Worth €300,000
Contents is Worth €60,000
FBD Insurance Quote:
Buildings/House €2 per €1,000
Contents €3.50 per €1,000
Aviva Quote:
Buildings/House €2.50 per €1,000
Contents €4 per €1,000
*These are known
as
'Material Facts'
-> These are
pieces of information that
you think the Insurance
company should know.
So Which Quote is Cheaper?
1. Decide what you want to Insure
Ring around different Insurance Companies
and speak to an Insurance Agent (a person who
works for one insurance company selling policies)
Is your Car covered during these few weeks?
The CAR!
YES!....

The Insurance Company will send out a "Cover Note"
http://www.videojug.com/expertanswer/car-insurance-explained/what-is-a-cover-note
If anything happened to them
it would cost a lot to replace them!
Probably the most difficult
principle to understand

So watch carefully!!!
2. (a) House valued at €140,000 & Contents valued at €42,000
(b) House valued at €350,000 & Contents valued at €65,000
(c) House valued at €600,000 & Contents valued at €80,000
Deductions?
Sometimes an insurance
company will offer a
Deduction on the premium
for certain reasons
Does a deduction mean
the Premiun will be Higher
or Lower?
Why would an
insurance company
offer a price deduction
for House Insurance?
An Example:
House is worth €500,000
Contents is worth €70,000
Quote: House = €4 per 1,000
Contents = €7 per 1,000

The insurance company offers a 10% deduction
for smoke alarms
The House has a smoke
alarms.
***Types of Insurance***
(VERY IMPORTANT)
Common JC Question
There are 2 Main Categories
of Insurance that we will look at
Household
or Personal
Insurance
Business
Insurance
FIRST
Personal /
Household
Insurance
Motor Insurance
3 Types
*Required by Law
A. "Third Party" Car Insurance

The Cheapest Type
Example: You break a Red Light
and crash into someone causing
damage to both cars.
Third Party Insurance
means that

The Other Person's car is paid for
They get compensation,
BUT YOU DO NOT
B. Third Party, Fire & Theft
*** This is required by law ***
More Expensive then just
Third Party Insurance
Same as Third Party Insurance

But You would be cover in
the case of Fire & Theft
MAKE SURE YOU REMEMBER
THIRD PARTY IS REQUIRED BY LAW
When you are asked in a TEST (Hint)

"What type of insurance is required by law?"
Answer is Not: "Motor Insurance"

It is "Third Party Motor Insurance at least"
C. Comprehensive Motor Insurance
or "Fully Comp"
This type of Insurance covers
all people involved in the Accident
So if the accident was your Fault
and both cars are damage,

Both "Parties" will be covered
This is the most Expensive Type
What is a
No Claims Bonus?
A Deduction on your
Car Insurance Premium
for having an Accident-Free Record

E.G. a 40% deduction in your Premium for 5 Years of
Accident-Free Driving
Insurance vs Assurance
Insurance "insures" against something that might happen

Assurance covers something
that is "assured" to happen.

It will definitely happen

Car is worth €23,000
It has Central Locking and an Immobiliser
The Quote is:

€5.60 per 1,000 of Value
There is a 10% discount for the Immobiliser
How much is the Premium?
House Insurance Quote:
House is worth €540,000
Contents are worth €46,000
The house has 2 smoke alarms
Quote is

€5.30 per 1,000 of value of the House
€7.60 per 2,000 of value of the contents
There is a 15% deduction for having smoke alarms
PRSI - Can anyone tell me what it
stands for?
5. Pay-Related
Social Insurance
If you work, and
earn an income, you must
by law pay PRSI
PRSI
If you are unemployed or become ill
and cannot work, you will be paid from
this fund
Is Insurance
a FALSE ECONOMY?
(is it worth getting?)
We have lots of things
we could spend our
money on.
Is Insurance worth it?
The cost of paying for
insurance is much less
than the cost of losing
your House/Car
& calculate the value of it
or contact an Insurance
Broker
*A broker
is a person
who works on their own and
sells insurance for a number of
different insurance companies.
They offer advice to people and
get paid a COMMISSION when
they sell insurance policies
Steps in Taking out Insurance:
How to take out Insurance
GET
the
3. Fill in the
Proposal Form
This is the application form
for Insurance. It is a list of
questions and details about the person and the object they want to insure
We will fill these in later on
4. The insurance
company (the Insurer)
agrees to provide you with
insurance for the year.
You must pay the "Premium" for the year.
The Premium is the cost of insurance
5. The Insurance company
will prepare the
"Insurance
Policy"
and send out a
"Certificate of Insurance"
to
the person buying insurance.

This can take a few weeks.
So while you are waiting, the
insurance company will send
you out a
Cover Note
The Insurance Policy is the written document
which contains all the details of the insurance contract
The Certificate of Insurance is a short
written summary of the key points of the
insurance policy. It includes the name, address
and type of insurance
Cover Note:
This is a letter written by the
Insurance Company to prove that
the person is insured. It is sent if
there is a delay between the beginning date for Insurance and when the Policy is actually sent out
6. Insurance lasts for one
year. At the end of the year,
you can renew your insurance
if you want to.

The Insurance company will send out
a "renewal notice". It lets you know
your insurance is running out.
Often, the insurance company will allow you a number of
"days of grace". This means you are still insured even though
you haven't yet paid your Premium.

*** YOU ARE STILL INSURED DURING THIS TIME
1. Home Insurance
2 Parts
Buildings Insurance
Contents Insurance

The higher the value
of the House,
The higher the cost
of the Insurance Premium

The higher the value of
the Contents, the higher
the cost of the Premium
If your Home is damaged by
Fire, Theft (Burglars), Flooding,
Accidental Breakage, Storms,
Lightning, they will pay the
repair costs
2. Health Insurance
Operations and
stays in Hospital can
be very expensive.
Health insurance
covers these costs if you
get sick.

In Ireland, Aviva, VHI and
Laya are the 3 big firms
offering Health Insurance
There are many different "plans"
for Health Insurance.
3. Salary Protection Insurance
If you have to quit
work because of Illness
or injury, Salary Protection
Insurance will pay your
Salary until you can return to
Work or up until the age of 60.
4. PERSONAL ACCIDENT
INSURANCE
If you have Personal
accident Insurance, will
be paid an amount of money
if you suffer injuries caused
by an accident.
For Example, Breaking your Leg,
Losing your hearing/sight
7. Life Assurance
6. TRAVEL
Insurance
If you travel regularly,
Travel Insurance will protect
you against the cost
of accidents or sickness
while you are abroad.
It will also
protect against lost
tickets or money.

If there is an emergency,
the Insurance Company will pay
to get you home.
*Life Assurance is to financially
protect the family and loved
ones of the person who dies.

For Example, if someone is earning
the
income for the family
and they
die, the family will receive a large
sum of money which will help them
pay their bills.

THERE ARE 3 TYPES
2. TERM Life Assurance:
You take out
Life Assurance
for a set number of years.


For Example if you are 40 years old
you might take out a term Life
Assurance for 20 years. If you die
within 20 years, you family will receive
a
large payment.


People often take out a term loan
to cover their Mortgage. If you have
a 30 year mortgage, you might take out
a 30 year term life assurance policy to
cover the cost of the Mortgage in case
you die.
3. Endowment Policy
In this case,
you pay an amount
every year
to the Insurance Company.

It is like a
savings scheme.
There is
an agreed amount that you will get
when you reach a certain age e.g. 60

If you die before that point, your family
will receive the money.
IDEA 9 BUSINESS INSURANCE
Business Insurance
Key Person Insurance
A Business can take out
insurance against the
death
or incapacity
of a key person
in their business.
The insurance policy will provide the
business with money to retrain or replace
that person if they cannot work or provide
income to the business.
Insurance Terms:
Mercedes Car worth €80,000 is
insured for €50,000

Is this Adequate Insurance?
Adequate Insurance
Some people believe that they can save money by not having any insurance on their home, their belongings, their car or even their life. But the reality is that having no insurance is a bad idea
By not having Adequate Insurance
you are taking a Risk

The Insurance you get must be enough to
cover any loss that might occur.

Insurable vs Non-Insurable Risks
Generally, a person can insure most things


But some things cannot be insured. Can anyone think of an Example?
- Insurable Interest means you must have a financial interest in the thing being insured

- It must be possible for the insurance company to work out the risk involved.

- Sometimes if the risk of something happening is very high, then it will be uninsurable
Would an insurance company
insure this building against Fires
at this particular time?
- For Example, Could you insure against the World Ending? or Nuclear War?

- Can you insure against failing your Leaving Certificate?

- In a Business can you insure against making bad decisions?
Exclusion Clause
Sometimes, the Insurance
company will insert an
'Exclusion' clause. This means
that some situations are not
covered by insurance.
Example:
You might have a personal
accident policy, but the Insurance
company will not pay compensation
if you were Bungee Jumping/Rock Climbing/
Hang Gliding etc
Policy Excess
Sometimes, when a loss occurs,
the Insurance company won't pay
the full amount of compensation. You must
pay a certain amount yourself.

The amount you have to pay yourself is called
the "Policy Excess"
Example:
You have Travel Insurance and
your flight is cancelled. You have a policy
excess of €100. The cost of a new flight is
€400. You pay €100 and the insurance company
pay the rest (€300)
Introduction to Insurance
IDEA 2:
Principles of
Insurance (Rules)

IDEA 3:
Types of
Insurance

Premium Questions
Premium Calculation
DEDUCTIONS
1. Calculate the Premium:

House is valued at €350,000
Contents is valued at €65,000

Quote is:
For House €3.60 for every €1,000 of Value

For Contents €5 for every €1,000 of Value
IDEA 8: Calculating Compensation
Compensation Worksheet
Amount insured for
----------------------------- x Amount of Loss
Value of the Item
1. House is valued at 450,000
Insured for 350,000
Flood Causes 100,000 worth of Damage
How much Compensation is due?
2. Car is valued at 25,000
Insured for 20,000
Crash causes 13,000 damage
How much Compensation is due?
3. House is valued at 155,000
Insured for 124,000
Flood Causes 85,000 damage
How much compensation is due?
INSURANCE
5 Principles of Insurance
How the insurance
industry works
Calculating an
Insurance Quotation or Premium

Cost of Insurance
People in Insurance
Types of Insurance
Making a Claim
Calculating
Compensation
Proposal Form
Terms:
Loadings
Cover Note
Days of Grace
No Claims Bonus
Premiums
Policy Excess
Exclusion Clause
Business Insurance
Loadings
Loadings are facts/information which might
make you more of a risk for Insurance
Health Insurance?
Car Insurance?



House Insurance?
18 Year old Male, Provisional Driving Licence
1999 Opel Corsa 1.1 Litre Engine
26 Year old Female with Full Licence
Driving a 2007 Volkwagen Golf with a 1.6 Litre Engine
45 Year old Male, Driving a 2010 Toyota Avensis
with a 2 Litre Engine and 3 Penalty Points
on his full licence
58 Year old Female with full licence, no
previous accidents and a 2004 1 Litre Toyota Yaris
Rate the following
People on how
much you think their
Insurance Premium
is.....
A
B
C
D
People
in Insurance

Have you heard of a Stockbroker?

When buying insurance, you can go straight to the Insurance Companies, or you can go to a Broker.

They are an agent for several companies and will “shop around” for you and advise you on the best policies.


For this, they earn a Commission or Brokerage Fee
Actuary

An Actuary is employed by the insurance companies to calculate the risk of things happening.

They use Statistics and Mathematics to calculate the Premium charged.
A Claims Adjustor/Loss Adjustor is hired by the insurance company to investigate claims against them. They will inspect damage/medical reports etc. They decide on a fair amount of compensation.
3. Claims Adjustor/Loss Adjustor
An Assessor can be hired by the insured person making the claim.
They also try to decide on a fair amount of compensation in the case of disagreements
Loss Assessor
4 Key People:

1. Broker
2. Actuary
3. Loss Adjustor
4. Assessor

1. Broker
http://www.youtube.com/watch?v=le0i8XJBrK0
Busines Insurance
Employer's PRSI
Employers must also pay
Pay Related Social Insurance.

It is a small percentage of Employee's
Wages

NPD Electrics are an
Electrical Appliances company.
They produce and sell products for the
Home market (Fridges, Cookers etc)

They have a Premises, Motor Vehicles,
Stock of Electrical Appliances.

They have a Factory and a Shop.

They employ 80 people.

They lodge their cash weekly in a Bank
which is 10 Kilometres away.
Make a list of the types of Business Insurance they would require.
This is required
by law if you are an
Employer
Premium Worksheet
WorkBook
Exercise

Calculate how much the insurance Premium is:

This one is a bit more
DIFFICULT
John Smith is seeking comprehensive car insurance.
His car is valued at €25,000
He is 24 years old. He has 2 penalty points.

Quote:

Insurance will cost €4.40 for each €1,000 of car value he wants to insure.

There is a loading of 10% for people aged under 25.

There is a loading of 5% per penalty point.

Comprehensive Insurance costs an extra €150 on top of the Basic Premium

All loadings are calculated as a percentage of the
basic premium
1. Work out Basic Premium: €4.40 per €1,000 of value. He wants to insure his car for €25,000 so there are 25 '€1,000' of value. SO
€4.40 x 25 = €110
The BASIC PREMIUM IS €110
2. Add Loadings: 10% for being under 25.
10% of 110 = 110 x 0.10 = €11

3. Add Loadings: 5% for each penalty point.
5% of 110 = 110 x 0.05 = €5.50 x 2 = €11

4. Add Loading for Comprehensive = €150
5. Add them all up:

Basic Premium €110
+ Loading (under 25) €11
+ Loading (Penalty Points) €11
+ Loading (Comprehensive) €150
TOTAL PREMIUM € 282
Premium
Exercise

John house is worth €230,000
He has it insured for €200,000

A fire damages €65,000 worth of the property

How much compensation will he receive?
He is under-insured. He is not insured for the full
value of the House. He will not receive the full amount of compensation. We must use the
AVERAGE CLAUSE Formula
200,000
---------- x 65,000 = €56,521. 74
230,000
Compensation Exercise
Test on
Insurance

Over Insurance:
This means getting
too much insurance

Car is worth €10,000
You decide to insure it for €15,000.

If you are over-insured,
you will always
get the full amount of compensation.







Under Insurance:
Not having enough insurance.

Car is worth €10,000
You insure it for €7,500

You don't have enough insurance!

You are at RISK and you won't
get the full compensation
If there is an accident and the Car is
fully destroyed. How much compensation will
be paid?
Remember the Average Clause Formula

Sum Insured
--------------- X Amount of Loss
Full Value
If there is a crash and the damage will cost
€4,000 to repair. How much compensation will be paid?
1. House is valued at €450,000
It is insured for €350,000
A Flood causes €100,000 worth of damage. How much compensation will be paid?
2. Car is valued at €25,000
It is insured for €20,000
A Crash causes €13,000 worth of damage. How much compensation will be paid?
3. House is valued at €155,000
It is insured for €124,000
A Fire causes €85,000 worth of damage. How much compensation will be paid?
"Loading"

In insurance, a LOADING
is something which will make
your insurance premium
more EXPENSIVE

e.g.
Health Insurance -> Smoker
Car Insurance -> Under 25
House Insurance -> City Centre
How can you
REDUCE your Premium & Risk?

There are things you can do
to PAY LESS FOR INSURANCE
e.g. Smoke Alarm/Sprinkler system

Safe Driving Course/Install Safety Camera

Stop Smoking/Drinking
IDEA 6
*Working out an
Insurance Premium
'How much it costs'
Where we are in the Course

In 1st Year we covered the following Topics

Chap 1 Income
Chap 2 Expenditure
Chap 3 Budgets
Chap 6 Consumer
Chap 7 Money
Chap 8 Banks
Chap 9 Making Payments
Chap 10 Savings & Investing
Chap 11 Borrowing
Chap 12 Making Purchases
Chap 27 Marketing

Today, a new
Topic

Chapters 13-14
REMINDER:
BE ORGANISED!!!!!

Notes Copy
Hardback






NOT a Soft Copy

Classwork
Copy




Folder for
Handout
Sheets



Plastic Pockets




Schoology:
REMEMBER,
this is a Resource
for You to use
for REVISION and STUDY]

MAKE SURE YOU CAN LOG IN

Bruce Springsteen
Taylor Swift
She insured her LEGS
for $40 Million.

The idea is that she is
well known for her
Stage Performances.

If she injured her legs, she
couldn't perform and would
lose a huge amount of MONEY
IDEA 1: What is
INSURANCE?
* Insurance is a
written contract
where an
insurance company
promises to pay for a certain loss
or damage in return for a payment
called a
premium.
Some Strange
Examples
Because you don't benefit
Financially from its existence
and you wouldn't Suffer
Financially from its Loss.






So name some things
that you can Insure....



Simple Example:


You own an iPhone 6




It is worth €600.
You are worried about

DROPPING IT
LOSING IT
SOMEONE STEALING IT
I went on to
the CHILL.ie website
and found the following
Quote for Insurance
So you pay

5.99 per month
or
about 70 Euro a Year.

To get it INSURED.
If Something happens
to it, you will get
COMPENSATION
so you can Buy another
Phone.



Example 2:

You lose your iPhone.

Chill.ie pays you €600
to buy a new one.
A month later,
someone hands in
your lost iPhone to
the Garda Station...

Chill.ie now own
this PHONE




OUR TASK:

Be able to explain and
understand a number
of different types of
Household/Personal Insurance
and
Business Insurance
Take a Screenshot
Add the image
to the Schoology
Assignment
called 'HEALTH INSURANCE'
TASK:

Find a Quote
for a Family

of

2 ADULTS
2 Children under 18
for one year.
The more expensive they are,
the more COVER you get.
CHOOSE one of these sites
www.avivahealth.ie
www.layahealthcare.ie

If nothing happens
to your Phone, you
lose your €70...
Imagine, you are trying
to get CAR INSURANCE

-> What relevant facts should you
tell the Insurance company?
Go to chill insurance
to get a home quote
Make up the details

https://www.chill.ie/home-insurance

When you have your Quote, screenshot
it and UPLOAD IT to Schoology
under the HOME INSURANCE
ASSIGNMENT
Example:

Laya Healthcare

1. Whole LIFE Assurance:

You pay a premium every month.
When you die, your family receive
an amount of money.
IDEA 4:
LOADINGS
Getting a
CAR QUOTE


Go to Chill.ie

Choose -> Car Insurance
and Get a Quote.

-> Make up a phone number
and email address

-> Choose an Age over 25
by selecting Date of Birth before 1990
When you get
your Quote,

Take a Screenshot
and add it to
Schoology
under the
CAR INSURANCE QUOTE
Assignment.
IDEA 5:
APPLYING FOR
INSURANCE
Before you get Insurance,
you must:

1. Figure out the VALUE of the item
that you want to Insure.

e.g. Car is worth €12,000



2. Contact an INSURANCE
COMPANY on the Phone
or on the Internet




3. Fill in a PROPOSAL FORM

This is an application
form for Insurance.

It features a list of questions
-> Like you filled in for
the Car Insurance Quote.
4. They will give you
a QUOTE

You then pay them
the
PREMIUM.

This is the cost of
Insurance for 1 Year.
THE PROPOSAL
FORM:

You need to able
to fill one of these
out
Try workbook
Page 110
Quick Check

Name the 5 Principles
of Insurance?
1. Insurable Interest
2. Utmost Good Faith
3. Indemnity
4. Contribution
5. Subrogation
Check your Knowledge

Workbook Pages

111 and 112
We need to
be able to
Calculate
the Price
of Insurance
"the Premium"
e.g.
DIFFICULT EXAMPLE
Workbook
Page 114
Qs 1 (a), (b)
and (c)
IDEA 7: Making a CLAIM
If an accident does happen
and you have INSURANCE,
you will make an
INSURANCE
CLAIM.
*We are going to
fill in an Insurance
Claim form.
Step 1: Fill in a claim form.
This states HOW, WHEN and
WHERE the loss happened
Step 2: The Insurance company
will send out a
'Loss Adjuster'
to investigate the claim and check
it is covered in the insurance policy.
Their job is to try and bring the
claim amount down as low as possible
for the insurance company.

STEP 3: If the Assessor agrees
that the claim is fair, the Insurance
company will pay the
COMPENSATION
This will return you to your financial
position from BEFORE the accident.




Fill in a
Claim Form




Page 119 Workbook
Practice one
more
FBD Insurance Quote:
Buildings/House €2 per €1,000
Contents €3.50 per €1,000
Aviva Quote:
Buildings/House €2.50 per €1,000
Contents €4 per €1,000
House 300,000 Contents 60,000
SOLUTION
House €2 per €1000 of value of the House
= 300,000/1,000 = 300 x 2 = €600
Contents €3.50 per €1,000
= 60,000/1,000 = 60 x 3.50 = 210

TOTAL = House 600 + Contents 210
TOTAL PREMIUM is €810
SOLUTION
House 300,000 Contents 60,000
House is 2.50 per 1000 of value of the House
= 300,000/1,000 = 300 x 2.50 = 750
Contents is 4 per 1000 of value of the Contents
= 60,000/1000 = 60 x 4 = 240
TOTAL = House + Contents
= 750 + 240
= €990
Homework Workbook
Page 114 Qs 1 (a), (b) and (c)
SOLUTIONS
Life Assurance of 150,000
150,000 / 1,000 = 150 x 2.50 = 375

5% Loading = ADD ON
5% of 375 = 18.75

375 + 18.75 = €393.75 TOTAL PREMIUM
Life Assurance of 80,000
80,000 / 1,000 = 80 x 3.50 = 280

5% Loading over 30 years = ADD ON
5% of 280 -> 280 x 0.05 = 14
1% for smoking -> 280 x 0.01 = 2.80
5% for dangerous job = 14
280
14 (age)
2.80 (smoker)
14 (dangerous)
---------

TOTAL Premium is
€310.80
Life Assurance of 260,000
260,000 / 1,000 = 260 x 1.75 = 455

15% Loading over 39 years = ADD ON
15% of 280 -> 455 x 0.15 = 68.25
2% for smoking -> 455 x 0.02 = 9.10

455
+68.25
+9.10
---------

TOTAL Premium is
€532.35
Fully insured means
you have paid for
insurance for the
FULL VALUE of your
Item
There is a FIRE that
destroys the House

INDEMNITY - Cannot make a profit from Insurance
IMPORTANT!!!!
You need to learn
this FORMULA!!!!
UNDER-INSURANCE
But you will
pay a HIGHER
PREMIUM!
= WASTE OF
MONEY
EXAMPLE:
You own a Car
worth €10,000


Only
€8,000
It is insured
for €8,000
8,000
--------- X 4,000
10,000

= €3,200
Vehicles
Buildings
Stock (Goods)
Cash
Employees
Managers
Products
Same as Personal Motor Insurance
e.g. Staff Member has an accident in
work and SUES the Workplace
-> Insurance pays for the CLAIM
e.g. Someone
slips on water
in McDonalds
and breaks their leg
Insurance will Cover the
CLAIM
Workbook
Questions
P117/118
-> Practice what
you have learned
5. (A) (i) He is over-insured, so he will
receive €20,000
(ii) He will only get €170,000
(B) (i) €25,000
(ii) €160,000
(C) €190,000
D. (i) If you are under insured,
you will only receive the percentage
of compensation equal to the percentage
of insurance you have.
(ii) Formula:
Sum Insured 200,000
--------------- x Loss ---------- x 35,000 = €28,000
Market Value 250,000
E. (i) 10,000
(ii)Formula:
Sum Insured 10,000
--------------- x Loss ---------- x 3,000 = €2499.99
Market Value 12,000
F. (i) Formula:
Sum Insured 80,000
--------------- x Loss ---------- x 30,000 = €20,000
Market Value 120,000

(ii) He is under-insured, and he can't make a profit
from INSURANCE
you need to write a REPORT
-> Use Google SLIDES to
do this.

-> FORMAT Must be correct
FOLLOW this guide


Homework
Exam Question
2011
(i) Premium Calculation
House is worth €250,000
Insured for only €200,000

Contents are worth €125,000
Fully Insured for €125,000
House Insurance Quote
€14 for every 10,000 of value
200,000/10,000 = 20
20 x €14 = €280
Contents Quote
€18 for every €5000 of value
125,000/5,000 = 25
25 x €18 = €450
Add together ->
280 + 450 =€730

€730 is the basic
premium
Now we must calculate the
Reduction of 5%

= 730 x 0.05 = €36.50
730 - 36.50 = €693.50
(ii) COMPENSATION
Flooding causes 40,000 of damage to the House
and 15,500 damage to the Contents.
CONTENTS are fully insured
so he will receive
€15,500
The HOUSE is under-insured so we
must use the Average Clause Formula
Sum insured
----------------- x LOSS
Full Value
200,000
---------- x 40,000
250,000
= €32,000
Total he will receive

15,500 (contents)
32,000 (House)
---------
47,500
Takeaway
the excess - 200

= €47,300
Workbook Always in class, textbook not needed in class
BUT used for Homework/Revision/STUDY
Examples of LAYA
Healthcare Insurance
Policies
Watch
the video
-> PAY ATTENTION!!!!!
-> Answers the Questions
in Schoology after the video
NOW -> Make yourself
Younger by a few years

Check the difference
in the Quote!
-> Steps: 1. Get the 'Basic Premium'
-> 2. Get 10% of this. Add it on
-> 3. Get 5% of the Basic Premium for each penalty point - Add these on
-> 4. Add the extra 150 on top for Comprehensive
-> 5. Get a TOTAL (Your answer)
Homework:

Qs 3 (a)
House
120,000/1,000
= 120 x 2.50
= 300
Contents
35,000/1,000
= 35 x 3
= 105
Total
300 + 105
= 405
(BASIC PREMIUM)
10% discount
= 405 x 0.10
= 40.50
5% discount
= 405 x 0.05
= 20.25
405
- 40.50
- 20.25
= €344.25
e.g. NPD Electric Insurance Report
Use Today's Date
Reference = A report on the INSURANCE Types that NPD Electric will require
BODY of Report -> Answer the Questions
in this section
TITLE:

FOR:


FROM:


DATE:


REFERENCE:


BODY OF THE REPORT:



SIGNED:
****Note: Adequate Insurance = Neither Under-Insured nor Over-Insured
*Policy Excess:
For some types of insurance, you have
to pay the first small amount of any claim
yourself - this is called the 'excess'
e.g. €200. This is to stop people making claims
for VERY SMALL amounts of money
e.g. You break a wing
mirror on your car.





Costs €60 to fix - don't
bother getting the insurance
company involved because your
excess is €100
USE one slide
for each heading
IDEA 10:
Non-insurable
Risks
and
'Adequate' Insurance
Not all risks are Insurable

If the insurance company thinks
something is TOO RISKY
(very likely to happen) or the Actuary
can't actually calculate the risk involved

e.g.

Won't insure against Nuclear War






e.g Won't insure against flooding
in a flood zone









e.g Health insurance for someone
who has history of similar health
problems.
Adequate Insurance:
This means having enough insurance
to cover the possible risk you face.

e.g You own a car - must insure it for full value
e.g Have expensive Jewelery/Paintings - should
be properly covered.

Full transcript