Insurance

Insurance

1. Principles:

   • Insurable interest: To insure something, one must benefit from its existence and suffer [financially] from its loss.
   • Utmost good faith: When applying for insurance, all material facts relating to the policy must be disclosed to the insurance company.
   • Indemnity: A profit cannot be made from insurance.
   • Subrogation: Once an insurance company has paid compensation for any insured item the right of ownership of that item passes to the insurance company.
   • Contribution: Where the same risk is insured with more than one insurer they will divide the cost of the claim between them.

2. Types of household and personal insurance:

   • Life assurance:
     • Term policy: this is for a fixed time period and usually covers the duration of a loan or mortgage, If the insured person dies the loan is paid off
     • Whole life policy: This pays compensation on the death of the insured person.
     • Endowment policy: This pays a guaranteed amount on a specific date or, if it occurs sooner on the death of the insured person.
   • Motor insurance:
     • Third party: covers injury to another person or damage to another person's car or property caused by the insured driver.
     • Third party, fire and theft: Third party car insurance including cover for the insured persons car being stolen or catching fire.
     • Comprehensive: All parties and vehicles that suffer loss in an incident, including the insured person and their car.
   • Home insurance:
     • Buildings cover: This covers the building in the event of fire, flood or storm damage. It only provides compensation if the structure of the building is damaged.
     • Home contents insurance: Covers all contents of the house from damage such as fire, flood, burst pipes, etc. It also covers against burglary.
   • Personal accident insurance: Covers the insured person in the event of an accident.
   • Health insurance: Covers the cost of hospital care and some medical bills in the event of serious illness or accident. It can provide cover for hospital stays and operations.
   • Travel insurance: Covers the insured person while travelling against stolen belongings, accidents, flight mishaps, theft, illness or injury.
   • Payment protection insurance: Covers repayments on a loan for a certain amount of time if the insured person is ill, has died or had compulsory redundancy.

3. Jobs in the insurance industry:

   • Insurance broker: A broker helps people find the right insurance deal. Most brokers represent several companies, They are paid commission by the insurance company for each policy sold.
   • Agent: An agent sells policies on behalf of one insurance company.
   • Actuary: An actuary decides what price the premium should be based on the risk of a loss occurring.
   • Loss adjuster: A loss adjuster investigates a claim for an insurance company and recommends the amount of compensation that should be paid.

4. Average clause: The average clause applies in the case of underinsurance and is based on the principal of indemnity. When a person fails to insure their property for the correct amount compensation will not amount to the full cost of replacement. The compensation will be in direct proportion to the amount the person has insured it for.