Chapter 15 - Insurance

• risk management - a planned approach used by businesses and households to deal with risks that can affect them
• insurance - financial protection against possible loss
• 1 - insurable interest - the insured person must own the item to be insured - they must benefit from its existence and suffer financially from its loss
• 2 - utmost good faith - when you are completing the proposal and claim forms, you must be completely truthful
• 3 - indemnity - you cannot make a profit from insurance
• material facts - information that may not be asked on the insurance proposal form but could affect the premium or compensation paid for insurance
• average clause - used by insurance firms to calculate compensation when an item is insured for less than its actual value
• 4 - contribution - linked to indemnity - used when a household or business insures an item with two or more insurance firms - might occur if an individual or business tries to make a profit from an insurance claim by claiming from each insurance firm
• 5 - subrogation - also linked to indemnity - states that once you have received compensation you give up your right to make any further claims
• mortgage protection - covers the cost of mortgage repayments of the household cannot meet their payments - often compulsory part of mortgage contract
• income protection - covers the financial loss to a household if the main earner is unable to continue to work either for a short period of time or permanently
• personal accident insurance - covers loss if the insured person has a serious accident
• travel insurance - covers risk such as loss of baggage and delayed flights - also covers cancellation costs if a travel plan has to be cancelled due to a family emergency
• identity theft - covers losses against your identity being stolen
• life assurance - pays compensation to a named person when the person who took out the policy died
• fidelity guarantee - covers a business against any loss suffered due to fraudulent activities by employees
• consequential loss - covers a business against a loss hat can arise as result of another risk happening
• cash in transit - covers a business against theft of cash while it's off the premises from the business premises to the bank
• plate glass - covers a business against large shop windows being broken or damaged