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
What are the 5 things insurance do for info and facilities
- Definitions. Insurers will define a single word
- Customer service standards statement
- Complaints procedures
- Claims info
- Privacy notice
What is an excess
The first amount for each and every claim for which the insured is responsible
What is the name for a large excess
A deductible
What is a franchise in respect to excess
It’s a fixed amount or period that acts as a threshold to determine whether claims are payable
What are time franchises sometimes found in
Engineering BI cover and sickness cover
What is meant by a warranty
A promise made by the insured relating to facts or performance concerning the risk
What is a continuing warranty
Where the insured promises that they will do something or things will continue
MSZ note - A warranty whereby the Insured promises that a state of affairs will exist for the duration of the policy
What happens under the Insurance Act 2015 is there is a breach of warranty
An insurer will not repudiate liability for a loss under a consumer contract
Also that warranties should become suspensive conditions- in other words the insurer will not be liable for losses occurring whilst there is a breach
Under the insurance act 2015 what is the summary for breach of warranties
Basis of contract clauses are prohibited so any warranty in a policy must be expressly agreed
An insureds breach of warranty merely suspends the insurers liability under a policy
An insurer my not rely on a breach of warranty where the warranty relates to a risk that is irrelevant to the type of loss
Warranties are written into the policy
What policy is an implied warranty found in
Marine insurance
What is a condition precedent to the contract
These are conditions that must be fulfilled prior to the formation of the contract itself
What 3 matter will render a policy void under policy conditions
*render - to give, provide (service or something)
- No insurable interest
- A fundamental mistake
- An illegal contract
What is meant by a continuing conditions precedent?
In motor insurance is it usual to have a condition relating to the roadworthiness of the vehicle. It is an ongoing requirement throughout the policy period to comply.
The insurer can set aside the whole contract if there is a breach
What are the two options available for an insurer under a continuing conditions precedent
Avoid the policy from the date of breach
Waive its right and leave the whole contract in force
What are conditions precedent to liability
Conditions that must be complied with if there is to be a valid claim.
If a condition precedent is not observed insurers can void liability but they may not repudiate the contract as a whole
What is representation
Made during the negotiation period what is disclosed
are not part of the policy itself, but are made during the negotiating period
What does there wall notice do
Shows any proposed changes in terms.
Premium to renew
Last years premium
For renewals between 1 and 3 years what needs to be included in consumer renewal notices
The renewal premium
Last years premium
The total premium incl. any MTA (mid term adjustments)
A statement to say that the insured should shop around
