Ch : 7 Indemnity Flashcards
What is an excess
An excess is an amount that is deducted from each claim and is paid by the insured.
In which insurance the principle of losses will b paid in proportion to what the insured has decided to set a sum insured
Applies to most Property insurance
Enterprise Act 2016
Passed on 4th May 2016 and gives policy holders a legal right to claim damages in the event of a late payment
After the amendment act, every insurers must pay any sum due to their insured within how many days
Reasonable time
The maximum amount can be recovered under a property insurance policy is limited to the
Sum Insured
In liability policies, the maximum amount that can be recovered is the
Indemnity limit plus agreed costs
In which cases indemnity is restricted only by the amount of the court award
Third party personal injury cover in a motor policy
Policies which contains limits within the overall sum insured
Household contents policy
In the absence of any new fpr old cover the insurers would have agreed to pay the insured
Full replacement purchase price , less a deduction for wear and tear and depreciation
In an valued policy ( same as agrees value policy) the insurable value is agreed between
Insurer and insured
An in an unvalued policy how is the insurable value
Calculated using the formula in the Marine insurance act ( MIA 1906)
In which kind of policy , there is an identifiable insurance value
Under Marine : both valued and unvalued
The measure of indemnity for property
Value at the date and place of loss
Which item its not possible to insure any kind of reinstatement basis
Stock
In which item the insured is entitled to receive any potential profit on sale
Farming stock
In which policies principle of indemnity is modified
Agrees value policies and first loss policies
If the agreed value is restricted to total loss then the partialoss will be settles on an
Indemnity basis
If the policy does not restrict the agreed value to total losses then the claim for damage will be settled on
Proportionate basis
Why non life insurance are called short term policies
Insurer has the option of inviting renewal at the end of each period of insurance
Definition of indemnity
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
What are benefits policies
Policies providing fixed benefits.Eg Accident and sickness
Benefit policies include
Personal accident
Sickness
Critical illness
Payment protection indemnity
Hospital cash plans
Permanent health
Elements of travel insurance
Several options for the settlement
Cash payment
Repair
Replacement
Reinstatement
Which types of insurance always involves the payment of money
Money insurance
Fidelity Gurantee
Business interruption
Loss of rent
Liability policies ( payment to be made to the wronged party not to the insured )
Which insurance its common by providing replacement as a means of providing indemnity
Glass insurance
Repair is common example in which insurance
Motor
What is reinstatement
Means that the insurer agrees to restores a building ( or piece of machinery) that has been damaged by an insured peril.
Reinstatement applies only to
Building and occasionally machinery
Why property and liability policies are contracts of indemnity
A value can be placed on the subject matter insured
Which policies are not contract of indemnity
Life and personal accident
A home insurance policy does not state any specific settlement options.In the event of a claim,the policyholder is therefore
Legally entitled to financial compensation
Reinstatement is a settlement option which
Restores the subject matter to the same condition it was in before the loss
Property and liability policies are contracts of indemnity because
A value can be placed on the subject matter insured
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
Labour and costs in respect of work in progress and finished stock
For which type of stock is the insured entitled to receive any potential profile on sale
Farming stock
If an insured does not wish to insure the full value of their stock for theft they are most likely to need an
First loss policy
If the insured understates the value of the subject matter of the insurance ..its said to be
Underinsurance
Formula for pro rata condition of average
Sum insured ÷ value of goods at risk × loss
Average condition cannot be applied to which insurances
Liability insurances
An insurer would only pay the total sum insured under a policy if the insured suffered a
Total loss
Why non life policies are called short term policies
Because the insurer has an option of inviting renewal at the end of each period of insurance
The importance of the principle of indemnity was emphasised by whom and in which case
Brett LJ, in the case of Castellain v. Preston (1883)
Which policy is a contract of indemnity and of indemnity only
Marine and fire policy
If settlement option is not available or stated in the policy then on wjat basis the claim will be settled
Insured has a legal right to financial compensation
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
Financial Ombudsman Service
In which policy it does not define the financial value of the indemnity
Liability policy as its often left for the court to decide
Which policy where the indemnity is unlimited
Motor liability policy causing injury or death
