Sie sind auf Seite 1von 41

E

N
A TE

A
IC
R
F
TI
U
R
S CE

INUNIOR
J

Types of Insurance

INSURANCE PEOPLE
Actuary

The actuary is employed by the


insurance company to determine the
risk involved in something. Actuaries
make extensive use of statistics to
calculate risks and the premiums that
should be charged.

INSURANCE PEOPLE
Insurance Brokers

If you require insurance you may go directly


to an insurance company or a broker. He or
she is an agent for several insurance
companies and will advise you on which
policy will suit you best.
A small commission called brokerage is
charger for this service.

INSURANCE PEOPLE
Loss Adjuster
The loss adjuster is hired by the insurance
company to determine if the amount of the claim is
fair.
The loss adjuster studies the claim and may inspect
the damage. He or she then decides on a fair
settlement.

INSURANCE PEOPLE
Assessor
The person making a claim may also hire a person
to determine the amount of compensation.
In this case the person is known as the assessor.

Insurable Risk

Insurable risks are risks that can


be insured against.
There is a likelihood that they may
happen.
Eg. Insuring a house against a fire
or burglary.

Non-insurable risks

You cannot insure against a risk when it is


very difficult to determine the risk involved.
E.g. You cant insure against the risk of
failing an exam as is very difficult to know if
you would pass or not and the premium
cannot be calculated.
In general, risks of a gambling nature cant
be insured against.

Life Assurance

Taken out by people on their lives.


On the death of the insured person a lump
sum is paid to the person named on the
policy, often a relative.

Endowment Assurance

Can be used by the household as a way of


saving.
Works in the same way as life assurance
except that when the insured person reaches a
certain age, e.g. 60, they can cash the policy
themselves.
Surrender value is the value of a life
assurance policy when it is turned into cash.

A young man is quoted a basic life


assurance premium of 700.
There is a loading of 15% of the
basic premium as he is a fire man.
However he gets a discount of
20% of the basic premium
because he is a non- smoker.
Calculate his premium.

Solution:

A man is quoted a basic life


assurance premium of 600.
There is a loading of 25% as he is
a formula 1 driver. However, he
gets a discount of 10% as he is a
non-smoker. Calculate his
premium.

Solution:

HOUSE INSURANCE
Insurance taken out on the house and also
belongings in the house in case of fire,
burglary, damage etc.
Loading= This is an extra charge on the
premium. E.g The house is located in a risky
area.
Discount= A discount (reduction) is given on
the premium. E.g. If the house has an alarm.

House Insurance Premiums


A house is valued for 200,000 and its
contents at 70,000. Insurance for the
house costs 2 per 1,000 value and
contents cost 6 per 1,000 value. A
discount of 10% applies as they
operate in a neighbour hood watch
area. Calculate the total premium.

Solution
Basic Premium
Buildings (200,000/1,000) X 2400
Contents (70,000/1,000) X 6 420
820
Discount
820 X 10%
82
Total Premium

738

THE AVERAGE CLAUSE EFFECT


If a house has a market value of 250,000 but is
only insured for 125000 then the insured can only
claim 125000 if the house is completely
destroyed. If partial damage occurs to the house
the person can only claim a fraction of the damages
claimed. For example, the claim is for 800 then
only 400 would be paid in compensation.

A house is valued at 300,000 and the contents at


100,000. Insurance for the house costs 3 per
1,000 value and contents cost 5 per 1,000
value. The owner decides to get the contents
insured for the full value but only get the house
insured for 200,000.
a. Calculate the total premium
b. In the event of fire damage to the house of
30,000, how much compensation will be paid
out.

Solution
a)
House (200,000/1,000) X 3

600

Contents (100,000/1,000) X 5 500


Total Premium

1100

b) Average Clause takes effect.


200,000
300,000

X 30,000 = 20,000

A house is valued at 400,000 and the contents at


50,000. Insurance for the house costs 6 per
1,000 value and contents cost 7 per 1,000
value. The owner decides to get the contents
insured for the full value but only get the house
insured for 350,000.
a. Calculate the total premium
b. In the event of fire damage to the house of
50,000, how much compensation will be paid
out.

Jim Kinsley
Buildings
390,000/1,000 X 1.80

702

Contents
50,000/10,000 X 1.50

75

Total Premium

777

Starzec Family
Basic Premium
Buildings (300,000/1,000 X 2) 600.00
Contents (60,000/1,000 x 3)
180.00
780.00
Less deductions
Alarm ( 780 x 10%)
78.00
Total yearly premium

702.00

MOTOR INSURANCE
This is the only type of insurance you must
have by law.
There are two main types of motor insurance
that a person can have.
- Third Party, fire and theft
- Fully comprehensive

THIRD PARTY FIRE AND THEFT


This is the most basic insurance a person can
have.
The insurance company will only cover the cost
of the car if it is stolen or goes on fire. If an
accident takes place that is your fault the
insurance will only cover the other car involved.
(also known as third party)

FULLY COMPREHENSIVE
This is the most common type of
insurance.
Everyone involved in a car accident is
given compensation.
This also covers the car in the case of
fire or burglary.

NO CLAIMS BONUS
A no claims bonus is given to a person who has
insurance but doesnt make any claims during
the year.
If a person has a no claims bonus they will
receive a discount on their insurance premium
the following year.
It is a reward for being a careful driver.

TYPES OF DOCUMENTS IN INSURANCE

PROPOSAL FORM
This is the form people use when
applying for insurance.
They give all of their details such as their
address, the type of insurance they want,
no claims bonus etc.
It can be completed in writing or online.

POLICY
This is the contract between the
insurance company and the insured/
It gives the details of the risks covered
and any conditions attached to the
policy.

QUESTION 2
The noonan family purchased their first
house recently with the help of a building
society mortgage. They paid 90,000 for
their home and they have spent 15,000
on furniture and fittings. Tom and Mary
are now wondering about insurance and
ask for your advice they want to know
the following?

PART (A)
Are the required by law to insure the family property?

PART (B)
Tom and Mary want you to calculate their total
premium they would have to pay if it costs 20
cent for each 100 buildings insured and 90cent
for each 100 content insured.

PART (C)
The Noonans think that the premium is very high, especially
for the contents. They are now thinking of insuring the
contents for just 10,000. They dont see the point in
insuring the contents for the full value. Show what
compensation they would get if they had the contents
insured for just 10,000 and if, as a result of a small fire,
3000 worth of contents were destroyed.

PART (D)
Tom and Mary are also considering taking out life assurance
but they know very little about it. Briefly explain for them
the following:
(i) The difference between insurance and assurance.
(ii) The different between whole life assurance and an
endowment policy.

QUESTION 5
Under the average clause, how much
compensation is likely to be paid out in the
following cases:
(i) A motorbike is crashed and completely
destroyed. It was insured for 1800 but the
company estimates that its true value before the
accident was 2600?

(ii)A house fire ruins a carpet valued at


750. The house contents were insured
for 3000, however the insurance
company estimates that the true value of
the contents before the fire was 6000.
How much compensation will they
receive?

(iii)

A car insured for 5000 is stolen and 1600


worth of damage is caused by the
thieves. The insurance company claims
however that the car was not insured for
its full amount of 8000. Calculate the
compensation they should receive?

PART (D)

(i)A family car is valued at 14,500.


The rate of premium is forty cent
per 1,000. Calculate the premium
payable if there is forty percent no
claims bonus.

(ii)

A 19 year old is quoted a basic premium of


900 for car insurance, to which must be
added 400 for underage loading. If 15%
beginners discount is allowed, what
premium is payable?