UNIT 5 Insurance 2. Compensation


Compensation is the money paid to the insured by the insurance company in the event of a loss occurring.


Compensation is calculated by an assessor on behalf of the insurance company. When seeking compensation after a loss has occurred, the insured must fill out a claim form.


Example


Kate O’Looney was driving to the Prom car park, Lahinch, when she hit a parked car, causing €10,000 worth of damage. She reported the damage to Garda Marvin in Lahinch Garda Station and filled out the following claim form for Holly in Coleman Insurance Ltd.


Coleman Insurance LTD Claim Form


Policy No.: 555123 Address: Main Street, Lahinch, Co. Clare Date: 4/08/2024


Descriptions of items lost/damaged: Hit parked car causing damage.


Was loss/damage reported to the Garda Síochána? (tick)


If Yes, please complete this section Signed: Kate O’Looney To calculate the compensation, Holly will:


• Make sure the car is insured for the correct amount.


• Assess if the accident occurred and that it took place as Kate reported.


• Assess the damage done.


Name: Kate O’Looney Occupation: Student


Details of Loss/Damage Location: Lahinch Prom


Value (€): €10,000


Yes


Date of purchase: 13/03/2023


 No


Date of reporting: 4/08/2024 Garda Station: Lahinch Garda who took details: Marvin Date: 4/08/2024


Examination Tip


 Make sure to read questions carefully and fill in details accurately.


 Check dates.


• If satisfied, compensate the other car owner to the value of the loss suffered – €10,000. Before we go any further, there are a few definitions that you need to know:


 Exclusion clause: This is when the insurance company agrees to cover the insured but will not pay out compensation under certain circumstances. The insurance company is excluding these situations from the contract. For example, Coleman Insurance Ltd will cover Kate for the above accident but will not cover her if she crashed the car while rally driving.


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