3 - Package Policies

Question 1

What are the package policies?

Answer 1

An insurance document which brings together fire, special perils, theft, business interruption, money and other types of insurance for small businesses, in a single contract.

Question 2

Examples of package policies:

Answer 2

1. Household policies
2. Travel package policies
3. Commercial package policies

Question 3

What are the two ways in which a household insurance claim for an item which has been damaged beyond repair can be met:

Answer 3

1. Indemnity (or market value): The amount paid represents the cost of replacing the item with another of the same age and in the same condition. Minus wear and tear.
2. New for old: The full cost of replacing the item as new is paid (usually to the supplier that provides the replacement). Although ‘new for old’ is now the standard basis of cover, insurers still usually apply a wear and tear deduction to some claims, such as damage to clothing or household linen.
   A deduction may also be made if the policy sum insured is inadequate or for property over a certain age.

Question 4

What is mean under ‘buildings’ in respect of household insurance?

Answer 4

The structure of the home, including fixtures and fittings, sheds, garages, greenhouses, other outbuildings, swimming pools, ornamental ponds and fountains and tennis courts. It also covers paths and patios.

In other words, anything that would normally be left behind when moving to a new house. Carpets are a notable exception and are covered under contents insurance.

Question 5

What cover is available in respect of building:

Answer 5

1. Fire, lightning, explosion and earthquake
2. Riot, civil or political commotions, malicious damage or vandalism
3. Storm or flood (subject to excess)
4. Falling trees or branches (excl. damage to walls, gates, fences or hedges)
5. Escape of water or oil (subject to excess)
6. Theft or attempted theft
7. Impact
8. Subsidence, ground heave or landslip (substantial excess of, say £1,000 or more)
9. Breakage or collapse of television or radio receiving aerials, aerial fittings and masts
10. Accidental damage to drains, pipes, cables or underground pipes
11. Legal fees, architects’ and surveyors’ fees. cost of debris removal
12. Loss of rent
13. Accidental damage extension (subject to excess of at least £100)

Question 6

Which of the perils will typically be excluded if a building is unfurnished or unoccupied for more than 30 or 60 days?

Answer 6

1. Riot, civil or political commotions, malicious damage or vandalism
2. Escape of water or oil
3. Theft or attempted theft
4. Accidental breakage of glass and sanitary features

Question 7

Subsidence, ground heave or landslip cover excludes loss or damage caused by:

Answer 7

• normal shrinkage or settlement;
• faulty workmanship, design or materials;
• demolition, structural alteration or repairs;
• coastal or riverbank erosion;
• movement of solid floor slabs, unless the foundations are damaged at the same time; and
• some structures other than the main property unless it is damaged at the same time
• to fixed fuel oil tanks, swimming pools, tennis courts, walls, gates, fences, etc. unless the house is damaged at the same time.

Question 8

What is content insurance?

Answer 8

Household goods and personal effects belongings to the insured or family member living in the property.

Question 9

What is covered under content?

Answer 9

1. Temporary removal
2. Clothing and personal effects
3. Accidental breakage
4. Loss of rent (10-20% of the contents sum insured)
5. Home office equipment

Question 10

What are the typical exclusions under content?

Answer 10

• other property more specifically insured under another policy;
• securities and documents;
• medals and coins, unless specifically insured;
• livestock (other than horses)
• motor vehicles

Question 11

What are the limits under contents insurance?

Answer 11

1. Single article limit: a policy may set limits on any one valuable (e.g. work of art, item of jewellery) of, say, 5% of the total contents sum insured or £1,500
2. Valuable limit: an overall limit for ‘valuables’ of, typically, one-third of the total value of contents.

Question 12

What are the minor exclusions differences of cover between content section and building section:

Answer 12

1. Theft or attempted theft of cash, currency, bank notes and stamps (excluded)
2. Theft or attempted theft by deception (oszustwo) excluded
3. Theft or attempted theft while the building is lent, let or sub-let
4. Accidental damage cover exclusions: clothing, contact lenses, money, stamps, coins, medals, plants, food and drink, sports equipment and bicycles

Question 13

What is covered under household insurance policies legal liability cover under BUILDING section?

Answer 13

• cover relates to liability incurred by the insured or their family as ‘owner’ of the property
• liability incurred under the terms of the Defective Premises Act 1972 for faults in any property formerly owned and occupied by the insured.

Question 14

What is covered under household insurance policies legal liability cover under CONTENTS section?

Answer 14

Cover relates to liability incurred by the insured or their family as:

• occupier rather than owner of the property;
• a private individual for personal liability;
• as an employer of domestic employees.

Question 15

What cover is provided in respect of legal liability under building and contents policy?

Answer 15

• accidental injury (including death or disease) and
• accidental damage to material property for the insured and family members permanently living with them.
• An indemnity limit applies to any one claim, typically up to £2m (increased to £10m for employers’ legal responsibilities).
• Cover applies everywhere in UK, not just within the property

Question 16

Household insurance: optional extensions:

Answer 16

1. Money and credit cards (cash, cheques, postal orders, bankers’ drafts and postage stamps/certificates, premium bonds, luncheon vouchers, gift token and travel tickets)
2. Personal possessions
3. Bicycles (general limit of cover £500-£1,000 per bicycle)
4. Freezer contents
5. Caravans
6. Small craft
7. Sports equipment
8. Personal accident, hospital cash benefit and creditor insurance
9. Domestic animals
10. Legal expenses
11. Identity fraud

Question 17

What is covered under money:

Answer 17

• Money and credit cards (cash, cheques, postal orders, bankers’ drafts and postage stamps/certificates, premium bonds, luncheon vouchers, gift token and travel tickets)
• accidental loss of money
• Limit of liability £200-£500 with an excess around £100

Question 18

What are the specific exclusions for money cover:

Answer 18

• Shortages due to error/omission

- losses not reported to the police within 24 hr

Question 19

What is covered under credit cards:

Answer 19

• loss or theft of credit card
• the loss needs to be reported to the card issuer and to the police within 24hr
• a limit of liability typically £500

Question 20

What are the specific exclusions for Credit cards:

Answer 20

• unauthorised use of the credit card by one of the insured’s household
• breach of the insurer’s terms and conditions

Question 21

What is covered under freezer content:

Answer 21

1. Deterioration of freezer contents due to a change in temperature (e.g. because of power failure) or
2. Contamination of freezer contents due to an escape of refrigerant or refrigerant fumes.

Question 22

What are the specific exclusions to freezer content:

Answer 22

• fire, lightning, or explosion damage,
• deliberate restriction of supply by the utilities supplier or the insured,
• damage after the freezer has reached a certain age.

Question 23

What is covered under caravans:

Answer 23

• Covers loss of or damage to the caravan and its equipment and personal effects whilst in the caravan, on an ‘all-risks’ basis
• Liability for bodily injury or damage caused by or in connection with the caravan is also covered up to, say, £1m.
• Some foreign use in Europe for up to 30, 60 or 90 days may be allowed

Question 24

What are the specific exclusions to caravans cover:

Answer 24

• wear and tear;
• theft while unattended, unless securely locked;
• hire or reward; business use; and
• storm or flood damage to the awning.

Question 25

What is covered under small craft:

Answer 25

Covers small craft for:

• accidental loss or damage,
• personal effects,
• salvage charges,
• third-party liability (including passengers).

Question 26

What are the exclusions to small crafts:

Answer 26

• hire or reward and business use;
• liability for injury to employees;
• theft of outboard motors, gear and equipment (this last exclusion may be removed subject to specified security measures being taken).

Question 27

What is covered under sports equipment:

Answer 27

Cover for accidental loss or damage to equipment and/or specialist sports clothing:
- anywhere in the UK plus usually use abroad for a limited period (up to 60 days).

Question 28

What are the exclusions to sports equipment:

Answer 28

• motor vehicles, trailers, caravans, boats etc;
• damage while the equipment is in use;
• living creatures;
• camping equipment;
• non-specialist clothing;
• bicycles;
• golf clubs and
• equipment for hazardous pursuits (e.g. parachuting).

Question 29

What is covered under personal accident, hospital cash benefit and creditor insurance:

Answer 29

Cover is available for:

• the risk of personal accident, and/or sickness, redundancy or unemployment for the insured and their family; and
• the inability to continue credit or mortgage repayment instalments following accident sickness or unemployment for up to 24 months, excluding the first month of any period.

Question 30

What is covered under domestic animals:

Answer 30

Cover for horses and ponies:
- includes death from accident, sickness or disease,
- economic slaughter and
- loss by theft or straying.
Cover may also include temporary incapacity, veterinary fees, saddles, bridles or other riding tack, third party liability, personal accident to the rider and accidental damage to the horsebox trailer.

For cats and dogs:

• veterinary fees,
• accidental death, death from illness,
• loss by theft,
• kennel fees while the owner is hospitalised,
• advertising and reward,
• third party liability and
• holiday cancellation following emergency surgery to the pet.

Question 31

What is covered under legal expenses:

Answer 31

• recovery costs,
• civil defence costs,
• prosecution defence costs,
• employment defence costs,
• a limit of liability of, say £50,000 will apply.

Question 32

What are the exclusions under legal expenses:

Answer 32

• claims relating to events outside the British Isles;
• fines and compensation payments;
• costs not agreed by the insurer;
• claims arising out of the insured’s business, deliberate or criminal act or omission, libel and slander, divorce or matrimonial matters and landlord and tenant disputes.

Question 33

What is covered under identity fraud section:

Answer 33

Cover for expenses incurred because of being a victim of identity fraud such as

• administration fees,
• attendant costs and
• the cost of notarising necessary documentation.

Limits apply to each section, subject to an overall limit of around £12,000.

Question 34

What is included as standard cover under travel insurace:

Answer 34

1. Personal accident benefits (benefit of between £10k and £25k for death, loss of eyes or limbs, etc.)
2. Medical and associated expenses
3. Loss of deposits
4. Baggage, personal effects and money
5. Personal liability (limit of indemnity is between £500k and £2m)
6. Delayed baggage (usually 12 hours delay up to, say, £100 - £150)
7. Hospital cash benefit (a daily benefit of £10 to £15; limit of between £200 and £600)
8. Travel interruption
9. Travel delay

Question 35

What is covered under medical and associated expenses under travel policy:

Answer 35

• medical expenses if the insured is injured or becomes ill,
• additional hotel/travelling expenses,
• additional expenses incurred, such as the cost of bringing the patient home,
• additional expenses of those travelling with the patient.
  This cover is subject to a small excess.

Question 36

What is covered under loss of deposit under travel policy:

Answer 36

Cover is provided for reimbursement of deposits and payments made and not used due to:

• death or illness,
• jury service,
• redundancy,
• unforeseen accumulation of work,
• theft or fire at home or work.

This cover is subject to a small excess.

Question 37

What is covered under baggage, personal effects and money under travel policy:

Answer 37

Loss of or damage to these is covered, up to certain modest limits
- a total sum insured of £1,000 to £2,000 with a limit of £250 for any one article and a separate limit of between £200 and £500 for valuables, a sum insured of between £100 and £500 for cash etc.).
The cover is subject to a small excess.

Question 38

What are the optional extensions under travel insurance:

Answer 38

1. Failure of tour organiser ( Cover of up to £1,500)
2. Lack of services or amenities ( Benefit is approximately £20 per day, up to a maximum of £200)
3. Loss of passport ( The sum insured is usually £100 - £250)
4. Legal expenses ( Sums insured vary between £3,000 and £50,000)

Question 39

What are general exclusions under travel insurance:

Answer 39

• death, bodily injury or sickness caused by non-prescription drugs or intoxicants;
• pregnancy or childbirth;
• physical or mental incapacity;
• hazardous activities;
• suicide or self-inflicted injuries;
• loss of luggage caused by confiscation, loss of stamps, documents or camping gear, loss of money unless reported to the police within 24 hours;
• damage to fragile objects;
• terrorism.

Question 40

What is covered under commercial package policy:

Answer 40

1. Fire and additional perils
2. Business Interruption
3. Theft
4. Money
5. Glass
6. Assault
7. Goods in transit (up to £500)
8. Employers’ liability (£10m)
9. Public liability (£1m)
10. Product liability (£1m)

Question 41

What is covered under money in commercial package policy:

Answer 41

Loss of money:

• during business hours out of safe or in transit : £1,000
• after business hours in a locked safe: £750
• after business hours out of locked safe, at the insured’s home or authorised employee: £250-£500

Question 42

Commercial package insurance: optional extensions:

Answer 42

1. Refrigerated stock
2. Business ‘all risk’: covers accidental loss or damage and is bought as extra protection for fixtures, fittings, trade equipment and, possibly, stock. Such cover excludes pilferage and shoplifting and is subject to an excess.
3. Legal expenses: the trader’s legal costs in defending an action brought by a customer, employee or neighbour

Question 43

What is covered under cyber risk:

Answer 43

• cyber liability,
• data breach expenses,
• computer system damage,
• cyber-crime

Question 44

Tony’s travel insurance policy provides cover under all available sections of cover for him and his family. Which of the following occurrences can he not claim for under the policy
A bringing home his sons dead body
B Delay in departure of holiday flight
C Loss of his daughters limb whilst on holiday
D Loss of wife’s jewellery on holiday
E Medical expenses for him whilst on holiday
F Theft from home whilst on holiday

Answer 44

F theft from home whilst on holiday