O-LevelCommerceInsurance7100/22 · May/June 2017 · Q820 Marks

Tom is setting up a new business as a car rental outlet. He has bought twelve cars that are available for rent to the public. He needs insurance and banking services.

(a)(i)What is meant by public liability insurance?[1]
(a)(ii)Tom has been advised to insure his business premises against the risk of fire. Explain how an insurance company uses pooling of risks when issuing fire insurance policies.[4]
(b)(i)Explain two advantages to Tom of opening a current account.[4]
(b)(ii)State two purposes of a bank statement.[2]
(c)Should Tom accept credit cards as a method of payment from customers? Give reasons for your answer.[3]
(d)Tom considered buying a franchise from a multinational car rental company. Discuss whether or not he was right to open his own independent business instead of a franchise. Justify your opinion.[6]

Mark scheme

Marking points from the official mark scheme (May/June 2017). The mark or mark type is shown in brackets.

[1]
[4] Up to 4 marks for explanation
[4] 2 marks for each advantage explained
[2] 1 mark for each purpose
[3] Note: 0 marks for just stating Yes or No, but candidates can combine Yes or No reasons to achieve 3 marks.
[6] Level 2 (4–6 marks) Has discussed whether or not Tom was right to open up his own independent business instead of a franchise and has given a reasoned opinion (if a candidate has presented a one-sided argument, award 4 marks max.).
[6] Level 1 (1–3 marks) Has made some comments on own independent business and/or franchises with/without an opinion.

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