Ch : 7 Indemnity

Question 1

What is an excess

Answer 1

An excess is an amount that is deducted from each claim and is paid by the insured.

Question 2

In which insurance the principle of losses will b paid in proportion to what the insured has decided to set a sum insured

Answer 2

Applies to most Property insurance

Question 3

Enterprise Act 2016

Answer 3

Passed on 4th May 2016 and gives policy holders a legal right to claim damages in the event of a late payment

Question 4

After the amendment act, every insurers must pay any sum due to their insured within how many days

Answer 4

Reasonable time

Question 5

The maximum amount can be recovered under a property insurance policy is limited to the

Answer 5

Sum Insured

Question 6

In liability policies, the maximum amount that can be recovered is the

Answer 6

Indemnity limit plus agreed costs

Question 7

In which cases indemnity is restricted only by the amount of the court award

Answer 7

Third party personal injury cover in a motor policy

Question 8

Policies which contains limits within the overall sum insured

Answer 8

Household contents policy

Question 9

In the absence of any new fpr old cover the insurers would have agreed to pay the insured

Answer 9

Full replacement purchase price , less a deduction for wear and tear and depreciation

Question 10

In an valued policy ( same as agrees value policy) the insurable value is agreed between

Answer 10

Insurer and insured

Question 11

An in an unvalued policy how is the insurable value

Answer 11

Calculated using the formula in the Marine insurance act ( MIA 1906)

Question 12

In which kind of policy , there is an identifiable insurance value

Answer 12

Under Marine : both valued and unvalued

Question 13

The measure of indemnity for property

Answer 13

Value at the date and place of loss

Question 14

Which item its not possible to insure any kind of reinstatement basis

Answer 14

Stock

Question 15

In which item the insured is entitled to receive any potential profit on sale

Answer 15

Farming stock

Question 16

In which policies principle of indemnity is modified

Answer 16

Agrees value policies and first loss policies

Question 17

If the agreed value is restricted to total loss then the partialoss will be settles on an

Answer 17

Indemnity basis

Question 18

If the policy does not restrict the agreed value to total losses then the claim for damage will be settled on

Answer 18

Proportionate basis

Question 19

Why non life insurance are called short term policies

Answer 19

Insurer has the option of inviting renewal at the end of each period of insurance

Question 20

Definition of indemnity

Answer 20

Indemnity is financial compensation sufficient to place the insured in the same financial position after a loss as they enjoyed immediately before the loss occurred

Question 21

What are benefits policies

Answer 21

Policies providing fixed benefits.Eg Accident and sickness

Question 22

Benefit policies include

Answer 22

Personal accident
Sickness
Critical illness
Payment protection indemnity
Hospital cash plans
Permanent health
Elements of travel insurance

Question 23

Several options for the settlement

Answer 23

Cash payment
Repair
Replacement
Reinstatement

Question 24

Which types of insurance always involves the payment of money

Answer 24

Money insurance
Fidelity Gurantee
Business interruption
Loss of rent
Liability policies ( payment to be made to the wronged party not to the insured )

Question 25

Which insurance its common by providing replacement as a means of providing indemnity

Answer 25

Glass insurance

Question 26

Repair is common example in which insurance

Answer 26

Motor

Question 27

What is reinstatement

Answer 27

Means that the insurer agrees to restores a building ( or piece of machinery) that has been damaged by an insured peril.

Question 28

Reinstatement applies only to

Answer 28

Building and occasionally machinery

Question 29

Why property and liability policies are contracts of indemnity

Answer 29

A value can be placed on the subject matter insured

Question 30

Which policies are not contract of indemnity

Answer 30

Life and personal accident

Question 31

A home insurance policy does not state any specific settlement options.In the event of a claim,the policyholder is therefore

Answer 31

Legally entitled to financial compensation

Question 32

Reinstatement is a settlement option which

Answer 32

Restores the subject matter to the same condition it was in before the loss

Question 33

Property and liability policies are contracts of indemnity because

Answer 33

A value can be placed on the subject matter insured

Question 34

When calculating the indemnity value of a manufacturers stock it will be defined as the cost of raw materials at the time and place of loss plus

Answer 34

Labour and costs in respect of work in progress and finished stock

Question 35

For which type of stock is the insured entitled to receive any potential profile on sale

Answer 35

Farming stock

Question 36

If an insured does not wish to insure the full value of their stock for theft they are most likely to need an

Answer 36

First loss policy

Question 37

If the insured understates the value of the subject matter of the insurance ..its said to be

Answer 37

Underinsurance

Question 38

Formula for pro rata condition of average

Answer 38

Sum insured ÷ value of goods at risk × loss

Question 39

Average condition cannot be applied to which insurances

Answer 39

Liability insurances

Question 40

An insurer would only pay the total sum insured under a policy if the insured suffered a

Answer 40

Total loss

Question 41

Why non life policies are called short term policies

Answer 41

Because the insurer has an option of inviting renewal at the end of each period of insurance

Question 42

The importance of the principle of indemnity was emphasised by whom and in which case

Answer 42

Brett LJ, in the case of Castellain v. Preston (1883)

Question 43

Which policy is a contract of indemnity and of indemnity only

Answer 43

Marine and fire policy

Question 44

If settlement option is not available or stated in the policy then on wjat basis the claim will be settled

Answer 44

Insured has a legal right to financial compensation

Question 45

Who has indicated what where policyholders do wish to have a replacement they should be allowed to choose where they purchase this and ther are entitled to a cash settlement if they cannot find an acceptable alternative

Answer 45

Financial Ombudsman Service

Question 46

In which policy it does not define the financial value of the indemnity

Answer 46

Liability policy as its often left for the court to decide

Question 47

Which policy where the indemnity is unlimited

Answer 47

Motor liability policy causing injury or death