Chapter 1

Question 1

Sum Insured or Limits of Liability:

Answer 1

Sets the maximum amount payable. Losses exceeding this amount will not be fully covered.

Question 2

Conditions Precedent to Liability (or Recovery):

Answer 2

Must be met for the insurer to cover a particular loss.

• If these conditions are not met, the insurer may refuse to pay for that specific loss but not necessarily cancel the entire policy.
• For future valid claims, the insurer must pay if the conditions are met at that time.

Question 3

excepted/ excluded perils

Answer 3

those named as specifically not covered

Question 4

what are Implied duties imposed by

Answer 4

These are imposed by common law, whether or not they are
found in the policy wording

Question 5

What is meant by onus of proof in relation to a claim?

Answer 5

The insured’s responsibility to prove they have a valid claim

Question 6

What does an insured have to prove when making a claim?

Answer 6

An insured peril arose that cause the loss and is covered by the policy and the amount of the loss (receipt, valuation)

Question 7

What policy conditions may result in a claim only being partially paid?

Answer 7

The sum insured or limit of indemnity would limit the maximum amount recoverable, the clause of average when under-insurance exists and excesses and deductibles not being complied with

Question 8

What are the main implied duties on an insured following a loss?

Answer 8

Found in common law, act as if they were uninsured, advise the authorities, minimise the loss, prevent the loss from spreading, assist the insurer where possible

Question 9

What are the main express duties on an insured following a loss?

Answer 9

Written into the contract, usually involves informing the insurer, writing about the loss in detail and preventing any further damage

Question 10

What are the core principles of insurance?

Answer 10

Risk management, types of risks (financial vs. non-financial, pure vs. speculative, particular vs. fundamental), insurable risks (must be fortuitous, have insurable interest, not against public policy).

Question 11

What are the types of insurers?

Answer 11

Proprietary companies, mutual companies, mutual indemnity associations, captive insurers, protected cell companies.

Question 12

What are the elements of an insurance contract?

Answer 12

Offer and acceptance, consideration, legal capacity, legality of purpose.

Question 13

Can you give examples of insurable interest?

Answer 13

Property ownership, financial interest, potential liability.

Question 14

What are the consequences of non-disclosure or misrepresentation?

Answer 14

It can void the contract.

Question 15

Who are the regulatory bodies?

Answer 15

Prudential Regulation Authority (PRA), Financial Conduct Authority (FCA).

Question 16

What measures ensure consumer protection in insurance?

Answer 16

Treating Customers Fairly (TCF), Financial Ombudsman Service (FOS).

Question 17

What are the implied duties of the insured?

Answer 17

Act as if uninsured, notify authorities, prevent loss spreading, cooperate with insurer.

Question 18

What terms cannot be challenged for fairness under the Consumer Rights Act 2015?

Answer 18

Core terms like exclusions, if they are transparent and prominent.

Question 19

What is an average consumer?

Answer 19

Someone reasonably well informed, observant, and careful.

Question 20

What happens if a term is deemed unfair?

Answer 20

It is not binding, but consumers can choose to rely on it.

Question 21

What are conditions in an insurance policy?

Answer 21

Provisions that must be met for the policy to remain in effect.

Question 22

What are warranties?

Answer 22

Promises by the insured that certain conditions will be met.

Question 23

What are endorsements?

Answer 23

Additions or changes to the standard policy coverage.

Question 24

What is moral hazard?

Answer 24

The tendency of insured parties to take on more risk because they do not bear the full cost of that risk. (eg criminal conviction)

Question 25

When can consumers approach the FOS?

Answer 25

If they are not satisfied with the resolution provided by their insurer.

Question 26

What is the duty of fair presentation?

Answer 26

The insured must disclose every material circumstance they know or ought to know, or give the insurer sufficient information to prompt further inquiry.

Question 27

What happens if an insurer refuses a claim due to an exclusion?

Answer 27

The onus of proof shifts to the insurer to prove the exclusion applies.

Question 28

What are conditions precedent to liability?

Answer 28

Conditions that must be met for a claim to be valid.

Question 29

What is an example of a condition precedent to liability?

Answer 29

Maintaining an alarm system for theft coverage.

Question 30

What is the average clause in property insurance?

Answer 30

A clause that reduces the payout in proportion to the amount of under-insurance.

Question 31

Why is the average clause important?

Answer 31

It encourages policyholders to insure property to its full value.

Question 32

What information is typically included in a policy schedule?

Answer 32

Details about the insured, coverage limits, premiums, and specific terms and conditions.