Enterprise: Strand 1


Be Prepared – Examination


Question Time


1. Section A: Short Questions 2. Section B: Long Questions


Section A: Short Questions (2 to 2½ minutes per question) Sorry


to BUG you! Always use the


BUG technique: Box, Underline, and Glance.


1. Gerard is 21 years of age and has recently passed his driving test. He has now purchased an old car and needs to insure it.


Outline two factors that the insurance company will take into account when calculating the cost of Gerard’s car insurance. 1


2


2. Explain the following terms related to insurance costs: No claims Loading Premium


3. Tom and Michelle have been renting an apartment for the last five years. They currently have insurance for the contents of their apartment valued at €25,000. They have been reviewing their insurance requirement to save some money. They have received a quote for contents from BE Insurance Ltd as follows:


• €6.50 per €1,000 • There is also a discount of 25% for online applications. • They have decided to accept the quote and apply online. Calculate the cost of Tom and Michelle’s contents insurance.


Workings:


4. Peggy and Carl are Americans with a holiday home in Galway. They insure their holiday home for €200,000 but it is actually valued at €300,000. A flood causes damage to the downstairs area which will take €10,000 to fix.


(i) Calculate the compensation for the damage caused. Workings:


(ii) What clause is used to calculate the compensation? (iii) Explain the principle of insurance which is affected here.


5. Deirdre and Stephen just received their insurance quote from FBD insurance company. They were disappointed as the premium had increased by 15%. They were thinking of undervaluing their house.


(i) Should they reduce the value of their house? Explain why/why not. (ii) Why might insurance costs have increased?


6. Insurance is governed by principles. Explain the following terms. Indemnity


Insurable Interest


104


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