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Chapter 11
Unit 4- Definitions
| Term | Definition |
|---|---|
| Risk Management | The process of identifying key business risks, their likely effect on the business, and then putting in place a strategy to minimise them. Also involves taking out insurance on the risk. |
| Insurance | A contract wherby the insured pays a premium to an insurance company in return for compensation in the event of financial loss occuring. |
| Third Party Motor Insurance | Insurance which covers damage caused by a driver to other people and property. It is required by law for all vechicles driven on public roads to have this insurance. |
| Third Party, Fire and theft motor insurance | Insurance which provides third party protection plus loss or damage to the insured's own car from fire or theft. |
| Comprehensice motor insurance | Insurance which provides third party, fire and theft cover plus compensation for any accidental damage that happens to the insured's vehicle. |
| PRSI | Pay Related Social Insurance. A compulsory insurance payment to the State by both employees and employers. It is calculated as a perentage of gross income. |
| Fidelity Guarantee | Insurance which provides businesses cover against dishonesty or fraud by an employee against the business. |
| Public liabilty insurance | Insurance which covers a business against claims if a member of the public is injured in an accident that is considered to be the fault of the business. |
| Product liability insurance | Insurance which provides cover against any claims for harm of loss suffered through use of a business's products. |
| Employer's liability insurance | Insurance which protects a business against claims arising from accidents, injuries and illnesses suffered by employee as a result of their work |
| Consequential loss insurance | Insurance which provides financial compensation for loss of income in the event of a major risk occurring. |
| General health insurance | Insurance which covers the cost of private health care in the event of serious illness. |
| Permanent Heath insurance | Insurance which pays a percentage of your salary if you have to give up work due to an accident or illness. |
| Life assurance | Assurance which provides compensation to a named beneficiary in the event of the death of the insured. |
| Whole life assurance | Compensation will only be paid out after death of the insured |
| Endowment life assurance | A policy which pays out compensation when you reach a certain age or if you die before you reach that age. |
| Term life insurance | Insurance which provides cover for an agreed period of time, such as 20 years. No lump sum is paid unless death occurs within the stated period. |
| Insurance brokers | A person who works independently of insurance companies. They help people, for a fee, identify their insurable risks and give you unbiased advice on the best insurance policy to buy and from which firm. |
| Insurance agents | A person who works for a particular insurance company and only sell that companies policies. |
| Exposure unit | The object being insured, such as premises or a car. |
| Loadings | Extra charges added to motor premises to take account of the different characteristics or variables related. EG: age of driver /car , record of previous claims etc. |
| Cover note | A temporary document issued by the insurance company as proof of the existence of an insurance contract until the full policy contract is ready. |
| Insurance policy | Policy which sets out the the full contract, including items covered, value of the compensation available and the conditions attached. |
| Insurance claim form | A document that must be completed describing what happened and stating the amount of loss suffered. |
| Insurable interest | Principle of insurance which means that the person seeking insurance must benefit financially from the existence of the item |
| Utmost good faith | Principle of insurance which means that the insured must give truthful information and disclose all relevant and material facts when applying for insurance. |
| Indemnity | Principle of insurance which means the insurer agrees to compensate for the actual financial loss suffered. You are not allowed to profit from an insurance claim. The average clause applies when the insured under or over insures their item of value. |
| Over insurance | When you insure an item for more than it is actually worth. |
| Under insurance | When you insure an item for less than it is actually worth. |
| Contribution. | Principal of insurance which states that where two or more insurers are involved, they will divide the total cost of any claim between them. It prevents people making a profit. |
| Subrogation | Principal of insurance which states that insurers who pay out full compensation for an item insured with them are entitled to take possession of that item and to sue a third party who caused the loss to occur. |
| The Revenue Commissioners | The State agency responsible for collecting taxes of behalf of the government. |
| Corporation Tax | Tax paid on the profits made by businesses. The rate of it in ireland is 12.5%. This attracts large international businesses to base themselves in Irleland. |
| Value Added Tax | The percentage tax added to the price of certain goods and services. Most businesses are required to register as tax collectors. |
| Capital gains tax | Tax paid on profits made from the sale of a business assist such as premises, company shares etc. |
| Custom duties. | Tax paid on imports coming into Ireland from outside the EU. EG: raw materials |
| Commercial rates. | Tax levied by local authorities on property used for commercial purposes to help finance local government services. In certain areas this tax may be waived to attract businesses to set up there. |
| Employer's PRSI | Tax levied on businesses for every person they employ. It is calculated as a percentage of the employee's gross income. |
| PAYE tax | Pay As You Earn tax. Tax paid by employees on their wages. |
| Self-Assessment Tax | Tax paid by self employed people on their incomes. Random spot checks are carried out by the Revenue Commissioner to ensure people aren't paying too little tax. |
| Tax audit | A detailed examination by the R.C on a tax payers financial records. |
| Employees's PRSI | A compulsory insurance payment made by employees to the State. It is calculated as a percentage of gross income. |
| Universal Social Charge | Tax payable on gross income. It applies to taxpayers regardless of whether they pay income tax under PAYE or self assessment systems. |
| Excise Duties. | Taxes added to the price of certain types of goods such as alcohol, petrol, tobacco etc. |
| Motor Tax | Tax that must be paid annually on all roadworthy vehicles. It is collected by local authorities. |
| Capital Acquisitions Tax | Tax paid by those receiving money or assets as a gift or inheritance. |
| DIRT | Deposit Interest Retention Tax. Tax which is automatically deducted from all interest paid on bank and building society accounts and passed directly by the banks to the R.C |
| Form 12A | Form filled out by an employee and sent to the tax office on first employment. From this the R.C calculates the rate of tax and amount of tax credits available to the person. If this form is not completed they are charged emergency tax. |
| P60 | Form filled out by the employer and given to the employee at the end of each tax year. It contains details on the amount of pay, income tax and PRSI paid by that employee for the given year. It can be used when applying for social welfare. |
| P35 | Form filled out by the employer and sent to the R.C at the end of each tax year. It shows details of gross pay, tax, PRSI deductions from all employees. It proves that the correct tax was deducted and given to the R.C for the year. |
| P12 | Form filled out by the employee and sent to the R.C each year. Sent to see if they paid too much or too little tax for the year. It allows them to claim additional credits and claim back any overpaid tax. |
| P21 | Form filled out by the R.C and sent to the employee. It shows the the calculation of the person's total tax deductions for the previous year. Any overpaid tax is refunded and any underpaid tax is made payable. |
| P45 | Cessation Certificate. Form filled out by the employer and given to the employee when employment ceases. It contains details of gross pay, tax and PRSI deductions. It is then given to the new employer so that tax and PRSI is deducted at the correct amount |
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