Chapter 2 - Insurance Products (Product Types)

Question 1

Tort

Answer 1

A legal term to mean a civil wrong or injury, not arising out of any contract, which action for damages may be sought

Question 2

Employer’s Liability

Answer 2

Insurance that indemnifies the insured against legal liability to compensate an employee or their estate for bodily injury, disease or death suffered, owing to the the negligence of the employer, in the course of employment

Question 3

Marine & aviation liability insurance

Answer 3

Insurance that indemnifies the policyholder against the legal liability to compensate a third party for bodily injury, death, or damage to property arising out of operation of the vessel or aircraft

Question 4

Public liability insurance

Answer 4

Insurance that indemnifies the policyholder against legal liability for the death of or bodily injury to a third party or for damage to property belonging to a third party, other than those liabilities covered by other liability insurance

Question 5

Product liability insurance

Answer 5

Insurance that indemnifies the insured against legal liability for the death of or bodily injury to a third party, or for damage to property belonging to a third party, that results from a product fault

Question 6

Professional Indemnity Insurance

Answer 6

Insurance that indemnifies the policyholder against legal liability for losses resulting from negligence in the provision of a serice

Question 7

D&O Insurance

Answer 7

Director’s & Officers liability insurance that indemnifies the policyholder against the legal liability to compensate third parties owing to any wrongful act of the insured in his or her capacity as a director or officer of a company

Question 8

Environmental Liability Insurance

Answer 8

Insurance that indemnifies against the legal liability to compensate third parties as a result of bodily injury, death and damage to a property as a result of unintentional pollution for which the insured is deemed responsible

Question 9

Claim award inflation

Answer 9

When a court award is in favour of a claimant and it triggers a large number of similar claims with the same legal complaint against the insured

Question 10

Escalation clause

Answer 10

A clause included in an insurance contract that, each year, allows for the level of cover to automatically increase in line with an appropriate inflation index

Question 11

Goods in Transit Insurance

Answer 11

Commercial insurance cover against loss of or damage to goods whilst being transported in vehicles specified in the policy

Question 12

Actual total loss

Answer 12

Loss that occurs in property insurance (particularly marine and aviation) which occurs in one of three ways:

1) The insured item is totally destroyed
2) Where the insured item is so damaged that it can no longer be classed as the type of object originally insured
3) Where the insured is irretrievably deprived of the insured item

Question 13

Constructive total loss

Answer 13

Loss where the insured abandons the insured item because an ‘actual total loss’ is unavoidable or because the costs of preventing a total loss exceed the value saved

Question 14

Crop insurance

Answer 14

Insurance that indemnifies the insured against loss to their crop due to specified perils

Question 15

Household property insurance

Answer 15

Insurance that indemnifies the insured for the amount required to fully reinstate the property, this amount is different to the market value of the property

Question 16

Moveable property insurance

Answer 16

Insurance that indemnifies the insured for the value of the contents lost or damaged

Question 17

Motor property insurance

Answer 17

Insurance that indemnifies the insured for the loss or damage of the depreciated value of the vehicle insured

Question 18

Extended warranty insurance

Answer 18

Insurance that covers losses arising from the need to replace or repair faulty parts in a product

Question 19

Estimated Maximum Loss (EML)

Answer 19

The maximum amount that the underwriter believes could feasibly be lost in a single incident

Question 20

Fidelity guarantee Insurance

Answer 20

Insurance that covers the insured against financial losses caused by dishonest actions of its employees (fraud or embezzlement)

Question 21

Credit insurance

Answer 21

AKA pecuniary loss insurance. Insurance that covers against the risk that debtors will not pay their obligations

Question 22

Creditor insurance

Answer 22

AKA payment protection insurance. Insurance that provides cover to insureds who are subject to obligations to repay credit advances or debt

Question 23

Legal Expenses Cover

Answer 23

Insurance that indemnifies the insured against legal expenses incurred as a result of:
> Legal proceedings being initiated against the insured
> The need for the insured to initiate proceedings

Question 24

Personal Accident Cover

Answer 24

Insurance that pays a specified fixed amount in the event that an insured party suffers the loss of one or more limbs or other specified injury, or accidental death