Hi, I'm Mrs. Warehouse and welcome to our series of lessons on maths and personal finance.

I'm really excited to look at this with you, so let's get started.

By the end of today's lesson, you'll be able to assess different types of insurance.

On the screen, you can see the keyword insurance and its definition.

Feel free to pause if you wanna take a moment to read through it.

Our lesson's broken into two parts today.

We're gonna begin by considering different types of insurance.

Insurance is a means of protection from financial loss.

People may ensure their personal belongings, their pets or even themselves.

Is insurance legally required though? Take a moment to pause the video and have a think.

Welcome back.

What did you say? Well, let's see what Aisha and Jun think.

Aisha doesn't think so.

After all, when she got a phone, she didn't get any insurance for it.

And Jun says, "My older sister has got car insurance.

I'm sure she said she had to buy it." What do you think? Has this information made you want to change your answer? There are two main types of insurance that are legally required in the UK.

There's employer's liability insurance and motor insurance.

Now, employer's liability insurance is insurance that helps employers pay compensation to an employee if the employee becomes ill or is injured due to the work they're employed to do.

Employers can be fined 2,500 pounds for every day that they are not properly insured.

So you can see why it's important to have that.

Now, motor insurance.

You must have motor insurance for a vehicle to be able to drive it on UK roads.

Third party insurance is the legal minimum.

It helps to pay for any damage or injury caused to any other person, vehicle, animal or property.

It does not help with any cost to repair your own vehicle.

Let's do a quick check.

True or false? Third party insurance helps with any cost to repair your own vehicle.

Is that true or is that false? Pause the video and make your choice now.

Welcome back.

You should, of course, said false.

It helps to pay for any damage or injury caused to any other person, vehicle, animal or property.

Now you may be told you cannot do something if you do not have insurance.

Aisha says, "My parents were told they couldn't have a mortgage if they didn't have buildings insurance." Buildings insurance covers the cost to rebuild your home if it was damaged or destroyed.

Why do you think a mortgage lender might insist on this? Pause the video and have a think now.

Welcome back.

Well, let's consider what a mortgage is.

It's a loan that you can use to help you buy property.

It's secured against the property, meaning that failing to pay back can mean you lose the property.

In fact, it now belongs to the people that were loaning you the money in the first place.

It's therefore in everyone's best interest to ensure the property is insured.

Let's do a quick check.

True or false.

Buildings Insurance covers the cost to rebuild your home if it was damaged or destroyed.

Is that true or is that false? Pause the video and make your choice now.

It is indeed true.

Please note that buildings insurance does not cover any costs associated with replacing any personal possessions that were in your house when it was destroyed or damaged.

Now, some types of insurance are completely optional.

Jun says, "My phone is insured because I know I might lose it." Insuring expensive personal items such as phone, keys, laptop, or white goods like the washing machine or the fridge can give peace of mind as well as financial protection.

It's now time for your first task.

For question one, please sort each type of insurance into the correct category.

In other words, is it legally required, required or optional? And you can see the types of insurance below the table.

We have motor insurance, third party, motor insurance comprehensive a mortgage content insurance, a mortgage buildings insurance, holiday insurance and life insurance.

Pause the video while you sort these now.

For question two, explain why each type of insurance is either legally required, required or optional.

Pause the video while you write this down now.

Welcome back.

Let's go through this.

So, you had to sort each type of insurance into the correct category.

Well, third party motor insurance is legally required.

Remember, that's the legal minimum.

Mortgage buildings insurance is required because remember, to get a mortgage, it's normally one of the terms, but it's not actually legally required.

The other four types, so comprehensive motor insurance, contents insurance, holiday insurance and life insurance are all optional.

And depending on your circumstances, you may think they're required.

For question two, you had to explain why each type of insurance is either legally required, required or optional.

So legally required motor insurance third party is legally required so that any costs incurred by others due to your actions are covered.

In other words, it protects others.

The building's home insurance is often a requirement for a mortgage so that the property being mortgaged is protected and can be rebuilt if something happens.

This means the lender can seize the property if the mortgage payments are not made.

In other words, it protects the lender.

The optional insurances are all there and protect you and your personal belongings.

They're protecting you from a sudden large expense.

It's now time for the second part of our lesson.

We're gonna be exploring different types of motor insurance.

There are three main types of motor insurance.

Sam says, "Third party is the legally required one.

I'll just get that." Alex points out though, "Before deciding, let's consider each type." There's third party, which is the legal minimum.

It helps to pay for any damage or injury caused to any other person, vehicle, animal or property.

It does not help with any cost to repay your own vehicle.

There's third party fire and theft.

Now this helps to pay for any damage or injury caused to any other person, vehicle, animal or property.

That sounds familiar, doesn't it? However, it also protects you if your vehicle is stolen or damaged by fire, whether accidental or arson.

And the third type is comprehensive.

This is the highest level of protection.

It helps to pay for any damage or injury caused to any other person, vehicle, animal or property.

But this time, you and your vehicle are also covered.

It also protects you if your vehicle is stolen or damaged by fire.

Let's do a quick check.

Select the insurance type or types that help to protect you from financial loss if your vehicle is stolen.

Pause the video and make your choice now.

Welcome back.

You should, of course, have chosen comprehensive and third party fire and theft.

Let's consider what they do and don't cover.

Third party insurance covers damage to someone else's vehicle or property, injury you caused to others and injury to your passengers, but it doesn't cover you or your vehicle.

Third party fire and theft insurance covers all the same things that third party did, but it also covers fire damage and theft.

Notice that what it doesn't cover is still you in your vehicle, with the exception of fire and theft.

It also doesn't cover theft caused by careless behaviour, such as you leaving your keys somewhere, and accidental damage.

Comprehensive insurance covers a lot.

I suggest you pause the video now so you can take some time to read this through.

So did you see that even though this is comprehensive insurance, there are still things that it doesn't cover? "Wow!" says Sam, "That is a lot to consider.

Perhaps I should get comprehensive cover." It makes sense, it is covering more things.

Alex says, "Well, that's often but not always the most expensive type because it offers the greatest cover." "Ah, that might be something we should consider." Let's look at the difference in costs.

If comprehensive cover offers the best coverage, what is the most likely reason that other types of insurance exist? So you think it's option A, not everyone wants to be fully covered.

Option B, comprehensive insurance may be too expensive.

Or option C, damaging another vehicle and not your own is more likely.

Pause the video and make your choice now.

Welcome back.

You should have picked option B.

It's now time for our final task.

Laura's family have said they will help her buy a secondhand car when she turns 18.

However, she must pay for the insurance.

When she adds her savings to what her family is offering, Laura has a budget of 4,700 pounds.

Laura has narrowed her choices down to three possible cars and researched what the insurance will cost.

Here, you can see her options.

So option one, she could get a Citroen C1 and that will cost 1,950 pounds.

And then underneath she's listed three types of insurance for that car and what it will cost her.

Option two, she has a Ford Fiesta costing 2,990 pounds and you can see again what the three types of insurance will cost her for that particular car.

And option three is a VW Golf costing 3,490 pounds, and underneath you can see the three types of insurance and what it will cost to ensure that car.

So for part A, what combinations are possible for Laura with her budget of 4,700 pounds? Pause the video now while you select the correct combinations.

Welcome back.

In part B, Laura asks her 50-year-old dad if he would be a named driver and sometimes drive her car.

This affects the insurance quotes.

And you can see an updated table on the screen now.

What combinations are now possible for Laura with her budget of 4,700 pounds? Pause the video and work this out now.

Part C, Laura decides to add a telematics box to reduce her insurance.

This reduces the insurance offers as follows.

For option one, there's a 5% reduction.

For option two, there's a 10% reduction.

And for option three, there's an 18% reduction.

Update the table to reflect this.

Pause the video and do this for each type of insurance now for each offer.

Part D, using your updated table from Part C, what combinations are now possible for Laura with her budget of 4,700 pounds? And then Part E, what car and insurance policy do you recommend Laura should opt for? Write a paragraph to explain your recommendation.

Pause the video while you work this out now.

Welcome back.

Let's see how you got on with Laura and her budget.

So what combinations are possible for Laura with her budget of 4,700 pounds? Well, she could go for option one and she can afford whatever type of insurance she'd like for the Citroen C1.

For option two, the Ford Fiesta, she could only afford third party fire and theft or third party insurance.

She can't afford the VW Golf at all with her budget.

In part B, she asks her 50-year-old dad if he'd be a named driver and the table shows the updated insurance quotes.

So what combinations are now possible? Well, it's the same combinations as before.

So although the insurance quotes got cheaper, not cheap enough for her to be able to afford something else.

In Part C, Laura added a box to reduce her insurance, and I asked you to update the table.

On the screen now you can see the updated insurance quotes.

I suggest you pause the video and take time to check your answers against mine.

Do this now.

Welcome back.

Part D.

Using the updated table, which you can now see on the screen, what combinations are now possible for Laura with her budget of 4,700 pounds? Well, it's the same five combinations as before and this time, she can afford the third party insurance for the VW Golf.

So, what car insurance policy would you recommend Laura should opt for? What I've got here is just example.

Remember, it was what you recommended and you had to justify it.

I said I recommend Laura goes for option one and comprehensive insurance so she' i covered for her own costs, as well as someone else's.

If I'd wanted option two, I might've said I recommend Laura goes for option two and third party fire and theft.

That way she has a nicer car and that may mean it is less likely to need repairs.

And if I'd wanted to go for option three, I might've said I recommend Laura goes for option three and third party.

If Laura is very careful about how and where she drives, she's less likely to need to claim on her insurance.

Well done if you said something like that for any of these options.

It's now time to sum up what we've looked at today.

Certain types of insurance are a legal requirement and other types of voluntary.

In the UK, there are two types of insurance that are legally required.

Insurance can play a role in maintaining financial security.

Well done, you've worked really well today and I look forward to seeing you for more lessons in the future.

Goodbye for now.