Chapter 2 - Understand the basic features and scope of packaged commercial insurances and associated services.

Question 1

What are:
offices;
shops;
hotels and guesthouses;
salons;
surgeries;
care homes; and
commercial liability (including contractors).
?

Answer 1

the main types of commercial packaged policies

Question 2

What is included in the core cover?

Answer 2

Employers’, Public and Products Liability
Business Interruption
Property Damage included theft money and glass

Question 3

What basis is contents cover on?

Answer 3

Reinstatement - replacement s new

Question 4

What two bases do insurers ensure there is enough material damage cover?

Answer 4

Index-linking
Day one reinstatment

Question 5

On a packaged policy what are the maximum figures between for the contents sum insured?

Answer 5

£200k-£500k

Question 6

What does automatic reinstatment of sum insured mean?

Answer 6

If a sum insured is £200k and a £50k claim was made, after paid out the full £200k is still the sum insured not the reduced £150k.

Question 7

Cover for “EU and public authoritys” is automatically included on a packaged policy under contents cover - what does this mean?

Answer 7

The cost for any additional costs resulting from the need to rebuild elsewhere, or in a different way, as required by applicable European Union legislation, Acts of Parliament or bye-laws of any public authority.

Question 8

What is the definition of target stock?

Answer 8

Stock that is low in volume but high in value such as tobacco, jewelry, photography equipment.

Usually untraceable and there is a demand for on the black market.

Question 9

What does all risks cover and what is the typical excess applicable?

Answer 9

Loss or Damage to property accidentally.

Typically £250-£500 for anything other than subsidence.

£1000 for subsidence.

Question 10

When is a theft claim covered and what is the typical excess’?

Answer 10

When trade contents are stolen provided the entry or exit is gained by forcible and violent means.

An excess of £250 - £300 usually applys.

Question 11

What is different about the theft conditions on an office policy?

Answer 11

The condition that the entry/exit must be forcible and violent doesn’t apply to all office policies, it is normally more lenient for losses where entry is gained through something like an open window or door.

Question 12

Is money cover and personbal accident or assult usually included as standard on a packaged policy

Answer 12

Yes with an excess of around £250 for money.

PA is usually around £100 per week and will have an age limit of 16-65/70

Question 13

Under glass cover is the cost of temporary boarding up and damage to frames and lettering included?

Answer 13

Yes

Question 14

What is the typical sum insured and excess under the glass section?

Answer 14

Sum insured £500
Excess £100

Question 15

What does business interruption (BI) policy cover?

Answer 15

Losses that occur when a business is unable to trade because of physical damage to their premises

Question 16

BI is covered on a Gross Profit Basis - what does this mean and who is this suitable for

Answer 16

Suitable for businesses whose operations involve sales, purchase of goods and opening and closing stock.

Gross profit is normally calculated by deducting any ‘uninsured working expenses’ (expenses that will reduce or even cease in the event of loss or damage at the premises) from the turnover or income of the business.

Question 17

Why would Gross Profit Basis BI cover suit a shop?

Answer 17

If they are not trading, the variable expense of buying stock will not be there and therefore gross profit would work best.

Ie. Turnover minus the variable expenses such as replenishment of stock

Question 18

BI is covered on a Gross fees or incom bais - what does this mean and who is this suitable for?

Answer 18

This is suitable where the business provides a service rather than a product and charges a fee for that service.

These businesses purchase very little in the way of stock, and cover is, therefore, provided for the reduction in income to the business.

This ensure the client is not worse off due to the cause of a claim.

Question 19

BI is covered on a Increased cost of working basis - what does this mean and who is this suitable for?

Answer 19

For office risks, there is usually the option to insure ‘increased cost of working’ only.

This would be appropriate where a business can continue to function as normal, but will incur extra costs in hiring a temporary office space and suitable equipment while its own premises are being rebuilt.

Question 20

BI is covered on a Gross Fees or Income basis - what does this mean and who is this suitable for?

Answer 20

This is suitable where the business provides a service rather than a product and charges a fee for that service.

These businesses purchase very little in the way of stock, and cover is, therefore, provided for the reduction in income to the business.

The business will therefore not incur a loss due to the claim.

Question 21

What warranty is on all BI policys?

Answer 21

Material damage warranty - this means there bust be a policy in force which covers the physical damage which has caused the BI claim. The claim must also have been accepted.

Question 22

What is the “standard” BI Sum Insured?

Answer 22

A ‘standard’ sum insured is usually provided which is a multiple of the contents sum insured (typically 3 times) or £250,000, whichever is the greater.

Some policies have a fixed sum insured, which may be as high as £500,000.

Question 23

What section would cover: loss or damage to premises rented or hired by the insured ?

Answer 23

Public Liability

Question 24

What is the standard PL sum insured and excess’s?

Answer 24

£2M-£5M £100-£300

Question 25

What is the standard Prods Liability sum insured and excess’s?

Answer 25

£2M-£5M - often no excess

Question 26

Under an office policy what level of cover is usually provided for Goods in Transit and Temporary removal of contents?

Answer 26

GIT £2500
TRC up to £25k

Question 27

What does loss of accounts receivable or book debts cover?

Answer 27

Cover for money that is owed by customers, which cannot be traced and, therefore, cannot be collected because the records have been lost or damaged by an insured peril.

The sum insured will be between £25,000 and £50,000.

Cover excludes mislaying or misfiling and deliberate falsification of records.

Question 28

What basis is portable equipment covered if added onto an office policy?

Answer 28

on an ‘All risks’ basis anywhere in the UK, and for up to 30 days elsewhere in the world

Question 29

What two sections are normally included on a shop policy that are not on an office policy?

Answer 29

Seasonal Increase in Stock
Loss of Licence