Aspects of claims process and related claims services Flashcards
Step 1
What is the insured bound by notification policy condition?
to report all accidents.
When does this apply?
This applies whether or not they intend to claim or expect a third party to claim against them.
Step 2
When is the insured required to complete an accident report form?
At the notification.
At notification, the insured may be required to complete an accident report form (ARF), which could be done:
Over the telephone or internet.
Step 3
When will the insurer set up a file?
After receiving necessary information.
This is likely to be electronic and no longer a physical paper file.
True
Step 4
What will the the insurer firstly establish when claim is to be made?
Whether a policy is in force and whether the insured is entitled to an indemnity.
When may the claim be investigated?
Depending on the nature and size of the claim.
This could be done as a desktop exercise by the insurer
True
A claims investigator or loss adjuster may interview the drivers and witnesses, as well as:
Visit the accident scene.
If there is a valid claim, repairs to the insured’s vehicle will take priority.
True
The repairs are often carried out at the insurer’s own authorised repair centres.
True
Step 5
Claims under other sections of the policy will be reviewed as necessary.
True
Property in the vehicle that was damaged in the accident:
Is reviewed as necessary
Step 6
A third party may claim for damage to their vehicle or there may be damage to other property.
True
The third party will generally be required to submit estimates for the repair or replacement of the damaged items.
True
The insurer will consider and either approve or renegotiate, the third party indemnity, repair or replacement for damaged items caused by the insured.
True
The insurer will establish who was at fault or ascertain the degree of negligence by each party.
True
As a way of controlling costs, if the insured is at fault:
the insurers may offer to proactively handle the third party claim.
True
Step 7
If a third party is injured in the accident, claims can be:
Complex and costly to settle.
The degree of negligence must be established before consideration is given to the extent of the injury, the medical prognosis, and other relevant considerations.
True
Whether the claimant was unable to work, or had required care whilst incapacitated: is information that needs analysis by:
Claims handler
Who must place an accurate valuation against the injuries in line with current damages awards made by the courts?
Claims handler
Why does the claims handler go through all the trouble to place accurate valuation?
in order to negotiate settlement of the claim.
Class-specific claims matters to provide an insight into the varying characteristics of the claims processes.
True
For instance:
A simple rear-end collision
motor claim in which no-one was injured. This could be settled in a few days if the insurer were proactive.
True
But for instance:
A fatal accident under a liability policy, which may take years to resolve and would require a different level of sophistication and expertise.
True
Claims process flowchart ??
Notification Review Response to claimant Claim investigation Claim negotiation Claim settlement Recoveries Review
The considerations for both cars and motorcycles will be the same, subject to certain policy differences.
True
Where the insured has non-comprehensive cover (i.e. third party, fire and theft, third party, only or RTA only), they must:
still,
Report the incident to their insurer as one of the claims conditions.
The insurer will take no further action in respect of any damage to the policyholder’s own property, because they have no cover for this.
True (in a non comprehensive cover if the insured damages his own car)
The insurer would ONLY deal with third party claims, subject to liability.
True (I.E. NON Comprehensive Cover)
The insured would have to make a claim against the responsible party or their insurer where they would be dealt with as the ‘third party’ as discussed above.
True (I.E. NON Comprehensive Cover)
Where an insured has comprehensive cover and has a claim against a liable third party, their insurer would utilise the subrogation condition in the policy to recover the costs they have incurred.
True (i.e. Comprehensive cover)
Question 4.1
What rights does the subrogation clause give the insurer?
The insurer the right to stand in the place of the insured before paying their claim enhancing the common law to claim against third party.
For the money already paid out to its insured.
What do Health claims regard?
Personal accident and sickness policies.
The handling of such claims is vastly different from those under indemnity policies.
True
They are benefit policies and the settlement figure has already been agreed at policy inception.
True
When a health claim is submitted, the insurer will check that a valid contract was in force and that the policy conditions have been met.
True
The appropriate supporting evidence must be provided:
If the insured :
has died as a result of an accident or sickness, there may be a coroner’s inquest and a post-mortem examination, and a death certificate must be provided;
suffered the loss of a limb or limbs, sufficient proof must be provided; and
is temporarily or permanently disabled, they must provide a medical certificate and be in the care of a registered doctor.
The insurer may wish to involve its own medical representative to confirm the extent of any illness or disablement.
True
Why are personal accident and sickness policies always benefit policies rather than policies of indemnity?
The loss of limb or health is something that is impossible to put a financial value on and insurances provide for the payment of a pre agreed sum.
Household contents are divided into two categories:
Durable goods
Things like household furniture, refrigerators and freezers, etc.
Consumer goods
Less durable items that are likely to wear out more quickly, such as curtains, towels and clothing.
Most insurers will state in their policy wordings that claims for durable goods are generally settled on a
‘new for old’ basis.
This means that damaged goods will be replaced by new items, rather than the claim being settled on an indemnity basis.
True (‘new for old’ basis.)
Claims for consumer goods are generally settled as new for old or on the basis of the cost of replacement, less wear and tear, according to their age.
True (‘new for old’ basis.)
A claims settlement on this latter basis is more likely to lead to disagreements between the insurer and the policyholder, unless the policyholder’s expectations are well managed.
True (‘new for old’ basis.)
Claims under the buildings section of the household policy are usually settled by repairing the buildings.
True (Buildings Insurance)
The indemnity sum for the loss or damage to the buildings has been calculated as the cost of repair or reinstatement at the time of loss less an allowance for betterment.
True (Buildings Insurance)
Who is usually used to provide an expert’s opinion as to any substantial damage?
Loss adjuster
Betterment arises when certain aspects of the repaired property are in a better condition than:
they were before the loss
(for example, the installation of new wiring) or the repaired/ replaced article is better than the original one was when new, e.g. double glazing replacing an old single-glazed window.
True (Betterment)
Think back to the definition of ‘indemnity’. Why is an allowance for betterment subtracted from the indemnity sum?
The principle of indemnity states that the insured must be placed in the same financial position after a loss they enjoyed before the loss, and such improvements to their property would increase the value of the property, leaving the insured better off than before the loss took place, THIS IS AGAINST THE PRINCIPLE OF INDEMNITY .
The processing of travel claims will depend on which section of the policy the claim is covered.
True (Travel Insurance)
Standard Travel Insurance proof of evidence required when?:
Baggage and personal effects of money,
Medical and associated expenses,
its own enquiries with the travel authorities or ask that the insured obtains the necessary proof;
(But usually considerations that apply to health claims generally apply).
Travel interruption or delay, insurer can its own enquiries with the travel authorities or ask that the insured obtains the necessary proof,
The insurer will usually request proof of
purchase for the items claimed for, together with confirmation that the loss has been reported to the necessary authorities.
True
Claims under extended warranty policies are unlike those already discussed. A claims ‘settlement’ would result in the covered appliance being repaired or replaced.
TRUE (Extended Warranty Insurance)
Because there is no cash incentive to be gained, these policies are not subject to:
fraudulent claims as frequently as other classes,
Fraudulent claims such as:
like household or motor insurance…
It is very seldom that a claim form is even required, and a telephone call to the issuing company is usually the only action required by an insured.
TRUE (Extended Warranty Insurance)
The issuing company will then
instruct a repairer to attend the insured’s premises and carry out the necessary repairs, which can sometimes be subject to an excess?
TRUE (Extended Warranty Insurance)
Pet insurance is available to cover injury, loss or illness of a domestic family pet (such as, a cat or dog).
True (Pet Insurance)
A typical policy will cover vet’s fees required following accidental injury or illness, as well as cover for theft of the pet, boarding fees and even euthanasia costs.
True (Pet Insurance)
In the case of dogs, the policy can be extended to cover liability caused by the animal, should it bite or cause injury to another person.
True (Pet Insurance)
Commercial insurances will cover:
Commercial vehicle claims ,
Liability claims employers’, public, products, and professional indemnity
Pecuniary claims legal expenses, and business interruption.
Property claims such as fire and special perils, all risks, theft, glass, and money
Property claims such as
Fire and special perils,
In the event of loss or damage, the insured has a duty to:
the amount of damage, in writing,
deliver to the insurer full information about the property lost, destroyed or damaged
mitigate their losses, i.e. carry out, or permit to be carried out, any reasonably practical action to prevent further damage
notify the insurer immediately;
provide proof of loss (e.g. a builder’s estimate for repair) and,
if required, complete a statutory declaration of the truth of the claim
The insurer would then establish the following.
- Whether the policy is in force,
- Whether the claim is valid
(i. e. an insured peril caused the loss) - Whether the policy covers the loss
If the claim is large, the insurer will usually appoint:
an independent loss adjuster.
What does The loss adjuster do?
investigates the loss and prepares a report recommending the amount payable, under the terms of the policy,
investigates the cause of the loss as well as its extent, and ensure that the insured has complied with any related endorsements or warranties.
The loss adjuster advises on any recovery prospects.
True (Loss Adjuster) in investigating in large / complex claims .
The insured may appoint a loss assessor to act on their behalf and negotiate with the adjuster and/or the insurers.
True
Negotiations between the insured loss assessor and the insurer loss adjuster
Sometimes, a monetary payment is made.
Otherwise, the insurer may exercise its options by reinstating the building or replacing, repairing or restoring the property, as appropriate.
True. (exercising options of the insurer)
All risks claims::
The procedure for claims here is the same as that described for fire and special perils insurance.
True (All RISKS claims similar to FIRE and Special perils insurance)
For larger claims, an insurer usually appoints:
a loss adjuster who will ensure that the claim is valid and negotiate settlement on the insurer’s behalf.
In Theft claims the insurer requires the insured:
to notify the appropriate authorities, i.e. the police, of the theft.
Insurers often request a copy of the police report and, especially with larger claims, appoint a :
loss adjuster.
if fraud is suspected the insurer will usually appoint :
a specialist claims investigator.
The insurers then usually liaise with the police so that, if the stolen goods are recovered,
the insurer can claim them as salvage.
In Glass claims It is usual for insurers to
have approved repairers for these claims.
As there is little financial incentive to be gained and claims can rarely be ‘overstated’, when the insurer has satisfied itself that the claim is covered, repairs will usually be authorised.
True (Glass claims= Authorised Repairers)
The invoice from the repairer will be sent directly to the insurer.
True (the Authorised repairers)
Glass claims are usually subject to an excess to avoid small claims.
True (Glass Claims)
In Money insurance policy, when the insurer has completed its standard investigations in respect of cover, it will request:
Proof of loss, (In Money Insurance)
What else would the insurer request?
Confirmation that the matter has been reported to the authorities,
details of the occurrence,
proof that the money, cheques or stamps etc. were on the premises
There is great scope for abuse here, and insurers will want assurance that:
there is no fraud involved.
Money Insurance
If necessary, specialist investigators will be enlisted to assist their enquiries.
True
as there is great scope of abuse, and to ensure that there is no Fraud involved
Pecuniary insurance in (Legal expenses claims),
these policies are different from other claims, because an insurer can assess its potential liability before the claim commences.
True (Pecuniary insurance) in (Legal expenses claims),
The insured has an obligation to
notify their insurers before action is commenced and the insurer can then take any steps it deems appropriate.
True (Pecuniary insurance) in (Legal expenses claims),
This includes things such as :
appointing its own solicitors and, if
appropriate,
co-operating with the insured in attempting to reach a settlement before the court action starts.
Business interruption (BI) insurance covers the insured’s loss of profits following damage to their property caused by the action of an insured peril.
True (Business Interruption)
Consequently, there is always a property damage proviso in a business interruption policy,
True (Business Interruption)
Meaning that the underlying property must be insured before an interruption policy is issued.
True (Business Interruption)
Both policies are usually with the same insurer and the BI claim will be run in conjunction with the property damage claim.
True (Business Interruption run in conjunction with the property damage claim).
(Which needs to be in place BEFORE BI insurance comes into play)
BI claims are unique, in that at the proposal stage questions are asked about how the proposer will react in the event of a claim…
True (Business Interruption)
Examples of such questions would be:
- have they got alternative premises;
- how soon can they get up and running; and
- is there a detailed disaster recovery plan?
The insurer can ‘participate’ in the claim here because, unlike any other type of claim, :
the indemnity period selected (usually 12, 24 or 36 months) represents the maximum length of the claim.
The insurer can, and often does, have:
representation to minimise the loss.
Creditor insurance provides protection to the policyholder in the event that they are unable to:
repay a loan due to their death, disability or losing their job.
Therefore, before settling any claims on a creditor insurance policy the insurer will require:
evidence of the payments that the insured needs to make.
proof that the insured is not working;
Liability losses are claims arising out of legal liability for incidents involving injury to third parties (including employees) or damage to their property.
True (Liability Insurance in general)
Which act made employers’ liability insurance compulsory in the UK?
The Employers’ Liability Compulsory Insurance Act 1969
This insurance covers :
indemnity against bodily injury or
disease sustained by the insured’s employees arising out of, and in the course of, their employment.
It is common for this policy to be combined with a public liability policy.
True
Employers Liability
Which clime are a particular concern in industries with a high incidence of accidents or disease, e.g. mining?
Employers’ liability claims
Public liability policies, cover:
loss of or damage to third party property and/or third party injury caused by the insured’s negligence or breach of statutory duty.
Public liability policy is often combined with:
Product liability insurance,
Which policy provides the same cover, but for losses arising out of the sale or supply of the insured’s product.
Product liability policy
