10 - Policy Wording Flashcards
What does a policy schedule contain
- Insured’s name
- Insured’s address
- Policy period
- Premium
- Details of the subject matter
- Sum insured or limit of liability
- Territorial limits
- Policy number
- Any special exclusions conditions etc
- Operative sections of the policy
As a general rule what are the 7 basic structure for all general policies incorporate
- Heading
- Recital clause
- Signature
- Operative clauses
- Exclusions
- Conditions
- Policy schedule
What is the recital clause
Sets the scene for what follows in the policy by referring to the two parties, insured and insurer (but not by name) coming together to form the contract.
This clause also refers to the premium as having been paid or agreed to be paid by the insured as consideration.
What 3 things will the recital clause contain
- Policy conditions
- Schedule applicable to the insured
- Proposal confirmation
Why must the insured check the proposal confirmation
Failure to provide correct info can result in:
- Policy being invalidated
- Claim being rejected
- Claim not being paid in full
What are the operative clauses in regards to policy documents
They describe the scope of the cover in detail. The are the heart of the policy, specifying what is covered by the policy.
How are conditions stated in policies
Implied (exist whether or not they appear in the policy)
or
Express ( are stated in the policy wording)
What 4 things does it mean by implied conditions under policy documents
The insured must:
- Act as if uninsured
- May be required to advise the appropriate authorities
- Must take reasonable action ( e.g. attempt to extinguish a fire)
- Must not hinder (utrudniac) insurers in their investigation of a claim
What is meant by the term market exclusions
These are general exclusions common to all insurance policies
Why are war and related perils excluded
They are considered to be a fundamental risk applying to the community at large and therefore uninsurable
What is Pool Re
A mutual reinsurance company that offer ‘all risks’ perils linked to terrorism
What is the only way pollution can be covered under PL policies
Must not be a gradual operating cause and has to be a sudden identifiable event
What is a marine policy exclusion
Exclusion is standard in all property insurance policies for material damage to the property
What is contractual liability an exclusion of
All motor and liability policies
What is the alteration policy common condition
Found in most property insurance policies - duty of fair presentation to notify of any changes that increase the risk
What is the action by the insured in the event of a claim common condition
Sets out the procedures to be followed in the event of a claim
What is the fraud policy Common condition
In the event of any fraudulent, false or exaggerated claims being made:
- The policy may be cancelled
- Claim may be rejected
- Insured may retain any premiums paid
What is the reasonable precautions common condition?
The insured must take all the precautions to minimise the risk of loss or damage
What is meant by the average condition
For property insurance, indemnity requires the insurer to pay the full value of the loss, but only if the insured has declared the full value of the insured risk.
The average condition reduces claims payments under property insurance policies in proportion to the amount of under insurance
What is the subrogation common condition clause?
It’s the right of the insurer to take over the insured’s rights, following payment of a claim
What is the arbitration common condition?
It’s intended to deal with any disputes that arise as to the amount to be paid in settlement of a claim under a policy
The insured may be able to receive a refund under the cancellation condition if the insurer exercises its right to cancel by which way
A pro rata refund
What happens if the insured cancels the policy under the cancellation condition
If the policy hasn’t stated the insurer will return any premium paid in full
Within 14 day so the insured receiving the policy docs the insurer will return any premium paid less an admin fee
After 14 days the insurer will return any premium paid less an admin fee and the amount for the period the policy has been in force
What did the deregulation act 2015 do in respect of motor insurance
Don’t have to return motor cert