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IF3 C > 5 - Insurance products: personal insurances > Flashcards

5 - Insurance products: personal insurances Flashcards

1
Q

What are the main four levels of standard policy cover available for motor insurance?

A
  1. Road Traffic Act only (RTA only):
    - unlimited amount for injury or death caused to third parties;
    - £1.2m for loss of or damage to property belonging to third parties;
    - claimants’ costs and expenses;
    - charges for any hospital or emergency medical treatment.
  2. Third Party only (TPO):
    - £20m limit for third party property
    - indemnity to the insured’s employer, if the policy covers business use;
    - indemnity for the liability of passengers
    - legal costs in defending a claim.
  3. Third Party, fire and theft (TPFT) - the above plus the cost of repair or compensation if the insured vehicle is stolen, damaged during theft or attempted theft, and damage by fire, lightning or explosion.
  4. Comprehensive - In addition to what’s provided in third party, fire and theft, cover is provided for accidental or malicious damage to the insured vehicle.
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2
Q

What optional extensions are typically available for private motor insurance?

A

Breakage of glass (included in a comprehensive)
Personal belongings and clothing (in addition to standard cover)
Provision of a courtesy car (when the car is in for repair after the accident and they provide the replacement vehicle)
Foreign use
Legal expenses
Breakdown cover
Caravans and trailers
Extended personal accident benefits

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3
Q

What are the differences between the cover provided under a motorcycle policy and the cover provided under the private car policy?

A
  1. Theft of accessories or spare parts is not covered unless the motorcycle itself is stolen at the same time;
  2. The liability section generally indemnifies the insured, others permitted to drive the motorcycle and users of the motorcycle for social domestic and pleasure purposes;
  3. There are no personal accident benefits, medical expenses (other than RTA emergency treatment fees) or personal effects cover.
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4
Q

What are the main types of vehicles for commercial motor insurance?

A
  1. Goods-carrying vehicles
  2. Passenger-carrying vehicles (buses, hire cars, coaches)
  3. Agricultural and forestry vehicles
  4. ‘Special types’ which include ambulances, cranes and fork-lifts.
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5
Q

What limits of liability for third party property are usually included in:

A) Private motor car insurance?
B) Commercial vehicle insurance?

A

A) £1.2 million for RTA only, £20 million otherwise

B) £1.2 million - £5 million

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6
Q

What is covered under a commercial vehicle policy?

A
  1. Loading or unloading (In the case of the driver or attendant this extends beyond the boundaries of the carriageway.)
  2. Indemnity to driver (Anyone may drive the vehicle with the permission of the insured. The driver is indemnified personally)
  3. Indemnity to user (The insured may allow someone to use (but not necessarily drive) the vehicle for social, domestic and/or pleasure purposes.)
  4. Indemnity to passengers (This is included as standard in a commercial policy and covers negligent acts by passengers (e.g. opening a door into the path of a passing vehicle).
  5. Legal cost
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7
Q

What are optional extensions for commercial motor insurance?

A
  1. Windscreen cover (is normally included automatically)
  2. Medical expenses, personal accident benefits and personal effects
  3. Indemnity to hirers
  4. Increased third party property damage ((e.g. large type vehicles (crane) can potentially do a lot of damage))
  5. Sheets and ropes (These items are used to secure loads and may be stored on the vehicle when not in use; Sheets and ropes may be covered under a goods in transit policy, rather than a motor policy.)
  6. Loss of use (Up to 80% of leasing or hire charges if the insured is without their vehicle following accidental damage, fire or theft anywhere in GB or Western Europe.)
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8
Q

What is fleet insurance?

A

A group of vehicles under single ownership, covered under one insurance.
Minimum vehicles to be cover needs to be 10 or more although some insurers offer mini fleet insurance for 5 or more.

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9
Q

What is the purpose of fleet insurance?

A

To enable more accurate rating and to reduce administration by having one policy rather than one for each vehicle

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10
Q

What additional covers are often included in a commercial motor insurance policy as opposed to a private one?

A
  1. Joint insured clause
  2. Roadside assistance
  3. Additional helplines/handing/admin
  4. Contingent third party insurance (indemnity to employer when an employee is using their own vehicle for business but their personal insurance is inoperative)
  5. Occasional business use (indemnity to employee when using their own vehicle for business but their personal insurance does not cover business use)
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11
Q

What are the 3 main types of health insurances?

A
  1. Personal accident
  2. Sickness
  3. Medical expenses
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12
Q

How do personal accident and sickness policies differ from indemnity policies?

A

They are benefit policies - they pay an agreed sum if an insured event occurs rather than seeking to return the insured to the same financial position

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13
Q

Why might an employer take out a group personal accident or sickness policy on their employees?

A

To cover the costs of hiring temporary replacement staff
To cover lost revenue due to drop in productivity
To cover salary to the employee
To cover recruiting and training costs for replacement
etc.

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14
Q

What is a significant common market exclusion for personal accident and sickness policies?

A

Pre-existing conditions are excluded

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15
Q

What age ranges are personal accident and sickness policies typically limited to?

A

Sickness - 16 to 60
Accident - 16 to 70

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16
Q

What does a personal accident policy cover?

A

Death
Loss of limbs, eyesight, speech, hearing
Permanent total disablement (PTD)
Permanent partial disablement (PPD)
Temporary total disablement (TTD)
Temporary partial disablement (TPD)

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17
Q

How is a personal accident policy normally paid out?

A

Paid in a lump sum in the event of death, loss of limbs or permanent partial or total disability.

Temporary total or partial disablement are paid in weekly benefits (52 or 104 weeks)

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18
Q

In the event of partial disablement, what do insurer’s use to calculate payments?

A

The continental scale (pre-set scale of benefits): e.g. loss of one finger may generate a lump sum of 20% of the agreed lump sum for death and PTD.

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19
Q

How are sickness or illness policies usually offered?

A

As an extension to a personal accident policy although they are also available as standalone policies.

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20
Q

What are the standard exclusions for a personal accident or sickness policy?

A

Self inflicted injury or disease
Events under the influence of alcohol
Childbirth, Pregnancy
Sexually transmitted diseases including HIV
Pre-existing conditions
Motor cycling, racing, and extreme sports

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21
Q

What is typically covered under a medical expenses policy?

A

Hospital charges (surgery & theatre, nursing & after care, etc)
Specialist fees (consultants and surgeons)
Additional costs (eg ambulance fees)

22
Q

What are commonly excluded from a medical expenses policy?

A

Pre-existing conditions
Long term residential care

23
Q

What are the two main types of private household insurances?

A

Buildings insurance
Contents insurance

24
Q

What kinds of property is normally included in private buildings insurance?

A

The main structure of the house, as well as garages, gardens, outbuildings, sheds, greenhouses, inbuilt swimming pools, windows, fitted kitchens, etc.

In general, anything you would have to leave when moving house

25
Q

What are commonly covered perils under private buildings and contents insurances?

A
  1. Fire, lightning and explosion
  2. Storm or flood
  3. Escape of water or oil (pipes, water tanks, apparatus, domestic equipment eg washing machine)
  4. Falling trees or branches (excludes walls, hedges, etc.)
  5. Theft
  6. Impact
  7. Subsidence, ground heave or landslip
  8. Accidental damage to utilities (drains, pipes and cables)
  9. Fees (eg legal, architects, surveyor, removal)
  10. Loss of rent
  11. Riot, civil commotion, etc.
  12. Damage caused by collapse of aerials
26
Q

For private buildings insurance what is meant by the unfurnished/unoccupied exclusion?

A

Certain perils are excluded if the building is unoccupied or unfurnished for more than 30/60 days depending on the policy wording. This is because these risks significantly increase when the house is unoccupied. For example escape of water.

27
Q

What does private contents insurance generally cover?

A

Households goods and personal possessions, including any fittings and fixtures, belonging to the insured or family members living in the property.

28
Q

What are the main differences in coverage between a private buildings insurance and a private contents insurance policy?

A

For contents insurance theft must usually involve forced or violent entry, and exclusions usually apply to accidental damage (eg clothes not covered).

29
Q

What two kind of sub-limits normally apply within private contents insurance?

A

Single article limit: normally 5% of sum insured
Valuable limit: e.g.: one third of sum insured (those in excess of £5,000)

30
Q

Under a standard contents insurance policy (optional extension) what is covered under Temporary removal?

A

While the contents is temporary removed the policy automatically extend the cover.
Excluded: storm and flood when property is in transit or on the person;
Theft is only covered:
- at the bank, safe deposit or occupied private dwelling;
- in a building where the family member is residing, or is employed or carries a business;
- in the course of removal to or from bank or safe deposit.

31
Q

What are some usual exclusions to private contents insurance?

A
  • More specific insurance (property covered under another policy)
  • Medals and coins (unless specifically insured)
  • Motor vehicles
  • Livestock (except horses)
32
Q

What liability is covered under private household insurances? What typically are the limits of this liability?

A

Buildings: Liability of the owner and liability under the Defective Premises Act 1972. For example if someone was injured on your property due to your negligence

Contents: Liability incurred by the insured as occupier of the property, and other premises used as temporary holiday accommodation.

Usually a limit of at least £1 million (if not more) cover legal liability for accidental injury or accidental damage to material property.

33
Q

What are some common extensions to private household insurances?

A

‘All risks’ (both specified and unspecified items)
Money and credit cards (indemnity of between £200- £300)
Bicycles (up to £500 each)
Domestic animals (horses/ponies/dogs/cats)
Freezer/fridge contents (limit of indemnity of £1,000)
Caravans (limit of indemnity of £1m)
Sports equipment
Small pleasure craft (usually under 23ft with a maximum speed of 17 knots)
Legal expenses (limit of indemnity of £50k)
Personal accident and hospital benefits and creditors insurance

34
Q

What is a FloodRe?

A

A re-insurance company owned and managed by insurers; set up jointly by the government and insurers designed to ensure properties at risk of flooding still have access to affordable cover.

35
Q

How is FloodRe funded?

A

Via a levy on participating insurers. The levy is £180 million per year and insurers are responsible for a percentage corresponding to their share of the household insurance market

36
Q

What properties are eligibly for the FloodRe scheme?

A

Residential properties built before 2009.

37
Q

What risks are usually covered under private travel insurance?

A

Loss of deposits (e.g. due to cancellation)
Baggage, personal effect and money
Delayed baggage
Travel interruption
Travel delay
Personal liability
Medical expenses (up to £1m)
Personal accident benefits (usually £10-25k)
Hospital cash benefits

38
Q

What are some common optional extensions to private travel insurance?

A

Loss of passport
Lack of services/amenities
Failure of tour organiser
Legal expenses

39
Q

What are some common exclusions of private travel insurance?

A
  • 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.
40
Q

What is extended warranty insurance?

A

Applies to buyers of mechanical and electrical goods. The warranty is a guarantee that provides for free repairs (within certain period). The insurance extends this period.

41
Q

What is a typical condition and limit for an extended warranty insurance?

A

Repairs must be carried out by the supplier, sum insured £2,500

42
Q

What are the usual exclusions for an extended warranty insurance?

A

Risks covered by a household insurance policy
Negligent handling
Failure to comply with manufacturer’s instructions
Repair to bulbs, aerials, external wires, knobs, handles, driving belts, etc.

43
Q

What are some common exclusions for private motor insurance?

A

Wear and tear
Mechanical/electrical failure
Depreciation
Loss of use
Tyre damage from blowouts or punctures

44
Q

What does the European Union Third Motor Insurance Directive state?

A
  1. Where a vehicle is used in another EU country, the insurance must extend to provide the MINIMUM legal requirement of cover in that country or in the UK, whichever is greater.
  2. Cover for liability to those employed by the insured when travelling as passengers in the insured’s vehicle, but not the driver, must also be provided.
45
Q

What optional extensions are available for a private motor cycle policy?

A

Riding other cycles
Trailers

46
Q

What is the normal definition of a small craft under a standard household policy extension?

A

A vessel that does not exceed 23 feet with a designed speed not in excess of 17 knots

47
Q

Charlie’s Haulage Ltd. claim under their comprehensive commercial vehicle policy when one of their trucks is stolen together with its cargo of furniture.
What would you expect the policy to cover?
A) The claim for the stolen vehicle and the full value of its contents
B) The claim for the stolen vehicle and a restricted amount for its contents
c) The claim for the stolen vehicle only

A

c) The claim for the stolen vehicle only

It’s just the vehicle that will be covered.
The goods being carried by the vehicle would be covered by a separate ‘goods in transit’ policy.

48
Q

What cover is typically provided by a fleet policy?

A
  • Contingent third party insurance
  • Joint insured clause
  • Occasional business use
  • Roadside assistance
  • Helplines, message handling and administration
49
Q

Which of the items below do you think would fall within the scope of the contents section of a home insurance policy?

Curtains
Wallpaper
Pet dog
TV aerial
Boat

A

Curtains & TV aerial

Wallpaper would be covered under the buildings section and pets and boats are both exclusions under most contents insurance policies (they are the subject of separate, more specific, insurance).
The other items would normally be covered as part of the home contents.

50
Q

Joan has moved in with her friend Angela for a few days as her house is being decorated. While she is staying at Angela’s, her laptop is stolen from Angela’s spare room. How will Joan’s insurer treat the claim?
A) Her claim should be paid out
B) Her claim will be rejected

A

A) Her claim should be paid out

The contents section of a home insurance policy automatically extends to provide cover while the contents are temporarily removed from the insured’s home, but remaining within the defined territorial limits, so the claim should be paid out.

51
Q

In the absence of an accidental damage extension, household insurance will still usually cover accidental damage to:

A) floor coverings
B) a boundary wall
C) underground telephone cables
D) a swimming pool

A

C) underground telephone cables

IF3 C (11 decks)

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