Household

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Household Business Manager

• Insurance

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Insurance

• Is protection against a possible loss. I.e.
  Against a loss you hope will not happen
• Risk is the chance or possibility of danger,
  loss, injury.
• The insurance company called the insurer, in
  return for a fee called a premium, insures the
  person seeking insurance called the insured.

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3 Types of Risk

• Pure Risk? e.g. Insuring house against a fire.
  If there is a fire, a claim will be made. If
  there is never a fire, then no claim will be
  made.
• Speculative Risk? e.g. Investing in shares. The
  value of the share investment may rise or fall.
  You cannot insure against this risk
• Fundamental Risk.? E.g. Losses occurred by an act
  of God or by war. Such risks are uninsurable.

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Business Insurance

• ON ASSETS
• Material damage on assets- stock premises due
  to fire, flood, etc
• Theft stock money
• Motor 3rd party -compulsory (Road Traffic Act
  1933)
• -3rd Party fire theft
• - Fully Comprehensive
• 5 Cash in Transit- money stolen while on way to
  bank
• 6. Plate Glass Window window breakage (shops)

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• ON Liabilities
• Employers Liability injury/ accident/ illness
  of employees (Japan)
• Public Liability injury of public on our
  premises
• Product Liablity- protects against public claims
  for harm caused to them from using our product

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ON Employees

• Fidelity Guarantee employee fraud
• Key person insurance- protects firms against the
  loss of an important worker who is regarded as
  essential to the business success
• Private Health Insurance VHI, Bupa provide
  health care in the event of hospitalisation

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• Permanent Health Insurance if a person is sick
  unable to work, the insurer will provide an
  income to the insured. The premium depends on the
  income of the insured the risk involved in
  their work. E.g. Teacher health insurance plan
• PRSI

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11. PRSI

• (Pay Related Social Insurance) compulsory
  insurance paid to the government for all workers.
  The money raised goes towards paying for
  unemployment benefits, pensions, maternity
  benefits etc.
• One part paid by worker, the larger amount paid
  by employer.
• Amount contributed is caluculated as a of
  worker wages

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• Consequential Loss Insurance- e.g. in the event
  of a fire of your business premises, while
  repairing the damage trading must cease which
  leads to no sales revenue. This means loss of
  profits, employee wages, rent of premises etc
  may still have to be paid.
• Consequential loss insurance covers these costs
  also compensates the company for some of their
  lost profits during this period.

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Insurance cover for households

• All households should have insurance on their
  assets, liabilities on personal risks
• Assets Items own of value
• E.g. House Insurance, Motor Insurance
• Liabilities Large debts e.g. Mortgage Protection
  insurance. Lenders will not give a mortgage
  without this insurance. If the borrower dies
  before the debt is paid off, the insurance policy
  will cover the remainder of the loan.

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Personal Risks

• Private Health Insurance VHI, Bupa provide
  health care in the event of hospitalisation
• Permanent Health Insurance if a person is sick
  unable to work, the insurer will provide an
  income to the insured. The premium depends on the
  income of the insured the risk involved in
  their work. E.g. Teacher health insurance plan
• Personal accident insurnace gives compensation
  if you have a serious accident.

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Life Assurance (risk will happen)

• Provides compensation in the event of the death
  of the insured.
• Whole Life Compensation paid to family on
  insured on his death whenever he dies.
• Endowment Compensation is paid on the death of
  the insured to his family or upon reaching an
  agreed age, whichever happens first. Combined
  life assurance saving plan
• Term Life Compensation is paid on the death of
  the insured up to a certain date. If the insured
  dies before this date compensation is paid, if he
  dies after this date no compensation is paid.
  (Cheapest form)

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How to take out insurance

• Contact many insurance companies directly to find
  the cheapest premium or the best policy to meet
  your needs. You will be talking to the insurance
  agent.
• Alternatively you can contact a broker who will
  help you find the best policy for a fee called a
  brokerage. (commission) A broker is independent
  from insurance companies get you cheap
  insurance as he buys insurance in bulk from the
  insurance companies.

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• Fill out Proposal Form (utmost good faith)
  detailing the unit exposure (the item being
  insured. E.g. the car, house)
• The actuary is a statistician who decides on the
  premium charged based on studying the degree of
  risk involved in the item insured. E.g young
  male drivers are charged a higher premium than
  young female drivers as they are considered a
  higher risk.

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5. Policy is issued

• The policy is the insurance contract , detailing
  the items covered
• If there is a delay in issuing the policy a cover
  note is issued. This is a temporary insurance
  contract while awaiting the policy.

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6. Renewal

• The next stage is the renewal notice the
  following year reminding the insured the
  insurance period is nearly over. If the insured
  wishes to continue having cover they must pay
  this years premium
• Days of grace- are extra days allowed by the
  insurance company to customers to pay their next
  premium from the date it was due. This does not
  apply to car insurance or livestock policies

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Factors effecting the Premium Size

• Value of item insured
• Level of risk- greater the chance of loss
  occuring the greater the cost of premium
• Loadings- Extra cost applied to motor premium
  because of higher risk. E.g. age of driver, old
  car, provisional licence, previous crashes
• No Claims Bonus- Reduction in premium given when
  the insured does not make any claims in the
  previous year.
• Level of profit wanted by insurance co.

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Before paying out on a claim the insurer will
consider the following Principles of Insurance

• Insurable Interest
• The insured person must benefit by the existence
  of the item suffer from its loss to be able to
  insure an item. E.g. I can only insure items that
  belong to me. I cannot insure my neighbours
  house.

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2. Utmost Good Faith (Uberrimae Fidei)

• The insured must tell the truth make full
  disclosure of all relevant facts to the insurer
  on the proposal form when taking out insurance.
• Relevant/ material facts are facts that could
  influence the insurer to accept or reject the
  application also influence the premium charged.
  The higher the risk of the loss occuring the
  higher the premium charged

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3. Indemnity

• The insurance company will compensate the insured
  for any loss occurred but the insured cannot make
  a profit from their loss.
• The risk is insured for the cost of replacing the
  item. E.g. If I bought a DVD player 5 years ago,
  it may have cost 800 but the replacement cost
  now would only be 150. When making a claim I
  would only receive 150

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4. Subrogation

• If a loss occurs to the insured he will be
  compensated by his insurance company. However if
  it was the fault of a 3rd Party (somebody else)
  the insurance company has the right to claim
  against the 3rd party who caused the damage.
• E.g. My neighbour crashes into my car. My
  insurance company can claim for the damaged
  caused to my car from my neighbour.
• Also if an item I make a claim for is later
  discovered (e.g. a robbed car) the insurance
  company can keep the car sell it to recoup some
  of the compensation they paid me.

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5. Contribution

• This is the principal that deals with
  over-insurance.
• If I insure the same item with two insurance
  companies, if a loss occurs I cannot make two
  claims against the two insurers.
• Both companies will share the compensation to be
  paid
• You are not suppose to insure the same risk twice
  there is no benefit in doing so.

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6. Average Clause

• Average Clause is the principal that deals with
  items that are only partially covered
  (under-insured) by insurance.
• If my house is valued at 500,000 and I only have
  it insured for 400,000. I have only insured 4/5
  of the house. If there is a fire in the kitchen
  there is 20,000 worth of damage, the insurance
  company will only pay for 4/5 of the damage.
• 4/5 of 20,000 16,000
• All Businesses should make sure they have
  adequate cover.

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Settling a claim

• Cash compensation
• Replace the asset
• Repaire the asset
• Reinstement- Buildings rebuilt

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