Chapter 10: Policy Wordings & Renewals Flashcards
What do the operative clauses of a policy wording do?
Specify the cope of the cover in detail.
What are exclusions as far as policy wordings are concerned?
The section which specifies the things not covered by the policy.
What are conditions in a policy wording?
The things parties are obliged by throughout the duration of the policy.
Give some implied conditions of a policy.
- Must act as if uninsured
- Must take reasonable action, but not if this endangers them
- Must not hinder the insurers in the investigation of a claim
Give some examples of market exclusions.
- War and related perils
- Riot and civil commotion (not covered at all in NI)
- Radioactive contamination
- Terrorism
- Pollution
- Marine policies (i.e. if the loss is already covered by a marine policy)
- Contractual liability (if insured has contracted into wider relationships)
- Sonic bangs
Give some examples of common conditions in policy wordings.
- Duty of the insured - to follow the provisions of the wording
- Continuing duty of fair presentation (for property insurance)
- Role of the insured in the event of a claim
- Fraud - fraudulent claims will be rejected and the policy cancelled
- Reasonable precautions (to prevent a loss)
- Contribution (where other policies exist)
- Subrogation
- Arbitration
What is a policy excess?
The first amount of each and every claim for which the insured is responsible, paid by the insured.
What’s the difference between an excess and a deductible?
No difference, a deductible is just a large excess.
What is a franchise?
A fixed amount or period that acts as a threshold to determine whether claims are payable. Claims are only payable once they surpass this threshold.
Where are franchises used?
- Monetary franchises are quite rare.
- Time franchises are used in sickness policies where the insurer wants to avoid paying out for trivial sickness of, say, less than a week.
What is a warranty?
An ongoing obligation on the insured to provide the insurer with information concerning the risk.
What happens in the event of a breach of warranty?
The insured can only avoid liability where the breach is only related to the loss (IA 2015).
In essence, the insured will not be liable while the warranty is breached, but will be once it’s remedied.
Give some examples of warranties.
- Of a fire policy - only a certain amount of paraffin can be kept on the property at any given time
- Of a theft policy - the building not be left unoccupied overnight
Where are implied warranties used?
In marine insurance only (that the vessel be seaworthy)
