6. Claims Procedure

Question 1

An ex-gratia payment is not an … and therefore subrogation and contribution cannot be applied.

Answer 1

indemnity payment

Question 2

Another claims resolution system is through … This involves legal proceeding and is costly.

This should however be viewed as last resort and is usually only done by insurers when they deal with very large claims and they feel they can repudiate the claim.

Answer 2

litigation

Question 3

Another claims resolution system used is through (1)… whereby an independent party is appointed to hear both sides of the argument.

The arbitrator needs to be (2)… to both parties.

Answer 3

(1) arbitration

(2) acceptable

Question 4

Claims are sometimes not paid due to technical reasons, or where there has been a genuine misunderstanding. If this is unfair to the insured, the company will pay part or all of the loss which is know as an …

Answer 4

ex-gratia payment

Question 5

It is important to remember that average only applies to policies of … Average does not apply to policies of compensation.

Answer 5

indemnity

Question 6

Name the three methods how disputes regarding claims can be resolved?

Answer 6

1. Negotiation
2. Litigation
3. Arbitration

Question 7

Settling a claim through repairs is … settles the account for the repairs. This method is usually used when settling motor insurance claims.

Answer 7

when the insurer itself

Question 8

Settling a claim through replacement it is often better to do it through the insurer as they can get …

Answer 8

better replacement prices

Question 9

Settling a claim through … is replacing the old with almost an identical version than what it orginally was. This is commonly used in insurance claims for fire.

Answer 9

reinstatement

Question 10

The burden of proof lies with the … when the loss was caused by a peril against which he holds insurance.

Answer 10

insured

Question 11

The burden of proof lies with the … if he wishes to claim that an exception operates.

Answer 11

insurer

Question 12

The claims negotiator determines whether the claim is valid or not:

• Is there a policy in force that covers the (1)… of the item lost or damaged?
• Is the (2)… an insured peril?
• Have the policy’s (3)… been complied with?

Answer 12

(1) cost
(2) proximate cause
(3) terms and conditions

Question 13

The fundamental principle of proximate cause is necessary to examine the …, because the insurer is only liable for losses proximately caused by an insured peril.

Answer 13

cause of loss in some detail

Question 14

The most common resolution system being used is … Discussions will be held until an amicable agreement has been reached.

Answer 14

negotiation

Question 15

The prescription method of … is when the insured intends to claim from SAPS, SANDF and Government and semi-government organisations. Prescription periods vary.

Answer 15

government claims

Question 16

The prescription period of … is the period in which the insured have to submit a final submission for the claim to be valid. This is usually a period of two years.

Answer 16

final submission of claim

Question 17

The preferred method to settle a cash settlement is by ….

Answer 17

EFT

Question 18

The prescription period of … is when the the insured has limited time to instigate legal proceedings if a claim has been repudiated.

Answer 18

legal proceedings

Question 19

The prescription period of … is when the insured has a certain time frame in which he/she needs to notify the insurer of the loss or possible loss.

Answer 19

notification

Question 20

The prescription period of … is the time an insured has for recoveries from third parties. This is usually a period of three years.

Answer 20

recovery from third parties

Question 21

The principle of … is when the insured is put in a better position after the loss has occured. An example of this is when wore out tyres gets stolen and the insured gets a replacement of brand new tyres.

Answer 21

betterment

Question 22

The proximate cause is not necessarily the … cause. The proximate cause can rather be referred to as the main event that led to the cause.

Answer 22

first or last

Question 23

What are the four methods of settling a claim?

Answer 23

1. Cash settlement
2. Replacement
3. Repair
4. Reinstatement

Question 24

With financial loss the … is used when the amount of the loss will only be known after the event, for example, legal liability insurance.

Answer 24

limit of indemnity

Question 25

With financial loss the … is used when the amount of any loss that could occur is already known, for example, houseowners insurance.

Answer 25

sum insured

Question 26

… refers to the time period a person has before the claim becomes invalid and the insured will not be able to claim any more.

Answer 26

Prescription periods

Question 27

… means the active, efficient cause that sets in motion a train of events which brings about a result, without the intervention of any force started and working actively from a new and independent source.

Answer 27

Proximate cause

Question 28

… is when the insurer tells the insured that the claim is not covered because terms and conditions has not been met.

Answer 28

Repudiation