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INSURANCE BASICS

Learn Insurance

\u00a9 2004 Insurance Australia Group Limited ABN 60 090 739 927

Insurance Australia Limited ABN 11 000 016 722 trading as NRMA Insurance.

Learn Insurance

2

Introduction: Insurance \u2013 helping you through life.

3

Part 1 - Insurance basics

4

What is insurance?

4

History of insurance

5

Important parts of insurance

7

What is risk?

7

What is an insurance premium?

7

How do insurance companies calculate the insurance premium they charge?

8

What is a claim?

12

Types of insurance claims

13

What can be insured?

13

What do insurance companies do?

14

How much of the premiums customers pay goes back into paying claims?

16

How to reduce risk

18

Part 1 Revision

22

Part 2 - Insurance industry overview

23

Part 3 - Premiums, pro\ufb01ts and losses

27

Part 4 - Risk

32

Part 5 - Business and Community Sustainability

33

Part 6 - Glossary

37

GO!

GO! GO! GO! GO! GO!

Contents

DISCLAIMER
The information contained within this document is of a general nature.
It is for educational purposes only and is not intended to be comprehensive, complete or advice.
While all due care has been taken in the preparation of this document, we take no responsibility and expressly disclaim

all liability incurred by any person in connection with the document or its contents to the extent permitted by law.

Learn Insurance

Introduction

3

Insurance \u2013 helping you through life

Insurance plays an important part in people\u2019s lives by taking out the worry and helping the

whole community.
Insurance is all about \u2018pooling\u2019.
A large number of people pay a small amount of money into a \u2018pool\u2019.
For example if their property is damaged, stolen or destroyed or if someone suffers an injury,

the \u2018pool\u2019 is there to help pay for repairs, replacement or compensation for injury.

This means those who put money into the \u2018pool\u2019 may not have to pay some or all of the

repair, replacement or in case of injury, the medical and associated costs.
Insurance gives peace of mind, letting people get on with their lives.
While this basic \u2018pooling\u2019 principle of insurance is simple, the workings behind insurance are

fairly complex.

This document is designed to provide a better understanding of insurance, including car,

home and contents insurance.
This document has information about:
\u2022 the history of insurance and how it has developed over the centuries;
\u2022 how insurance works, including how the price of insurance is set and the differences

between the various types of insurance available;
\u2022 how an insurance company runs;
\u2022 the insurance industry in general;
\u2022 why and how insurance companies try to reduce risk to make communities safer \u2013 on the

road, in the home and in workplaces.
NRMA Insurance has contributed in the development and review of this document.
The National Curriculum Services, a group that professionally design and produce curriculum

materials and address the professional development of schoolteachers nationally have also

reviewed this document.

Contents

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Upload Date:	02/03/2009
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