Chapter 3 Flashcards
Duty of Good Faith
Both parties must act in good faith, meaning honest and accurate disclosure
Consumer vs Non-Consumer
Consumer - an individual purchases insurance mainly for personal, non/professional purposes
Non-Consumer - contract apply to entities like businesses
Types of Motor Insurance Cover
- RTA or “Act Only”
- Third Party Only
- Third Party Fire and Theft
- Comprehensive
Recital Clause
Explains the nature of the contract, specifying that the policy is between the insurer and the policyholder, and third parties cannot enforce rights under the contract
Operative Clauses
- duration of the policy
- territorial limits
- may combine with the recital clause
- some policies extend cover to EU countries per EU directive
DOC Cover
- must have owner’s permission
- does not cover damage to the vehicle being driven
- exclusions include having a valid certificate of insurance for the other car
- excludes coverage if the car is disposed or or beyond economical repair
Personal Accident Cover
- covers accidental injury resulting in death, permanent loss of sight, or loss of limbs
- most paid by an insurer in any period is £5000
- no coverage for persons over 79 or under 18
Personal Effects Cover
- pays up to £100 for personal belongings lost or damaged due to an accident, fire or theft
- no coverage for money, stamps, tickets, documents or certificates
Medical Expenses Cover
pays up to £250 for medical expenses for anyone carried in the insured vehicle injured in an accident
Foreign Use Cover
- EU minimum coverage
- full coverage can be extended to other countries for an additional premium
Car Sharing
- the car carried no more than 8 passengers
- the car is not used as part of a business of carrying passengers
- the total contributions received do not involve profit
Car Laid Up
Cover can be suspended, with exceptions for fire and theft
General Exclusions for Motor Policies
- use by an unauthorised driver
- using the vehicle for an unauthorised purpose
- driving without a valid license
- liability from a contract agreement not covered by law
- losses due to war or nuclear
Avoidance of certain terms and right of recovery
The insurer may recover any amount it has to pay under the RTA that it would not otherwise covered due to a breach of policy terms
Different classes of use for a Motor Policy
Class 1/A - social, domestic, pleasure and personal business use
Class 2/B - social, domestic, pleasure and business use for the policyholder and their employer
Class 3/C - social, domestic, pleasure and business use for the policyholder, employer or business partner
Motorcycle TP Liability
- some policies may not indemnify employers
- DOMC is usually limited to TP cover
- DOMC cover applies only for motorcycles over certain engine sizes
- DOMC is not valid outside home territorial limits
Motorcycle AD, Fire and Theft
- accessories and spare parts are only covered if on the vehicle or stolen with it
- a minimum excess, typically £100, applies
Motorcycle General Exclusions
- driving restricted to the policyholder or named persons
- coverage in the hands of the motor trade or parking services is often not provided
- sidecars are covered if declared and requested
Commercial Vehicle Policies
cover follows motor car policies but differs in scope due to higher claim frequency and severity
Commercial TP Liability Limits
- unlimited liability for death or bodily injury
- property damage liability is often lower for commercial vehicles, often £1.2 million or higher
Commercial Vehicles Cover
- covers unloading/loading by the driver/attendant, but not by others
- coverage is limited to events occurring on the road or pavement
- typically does not extend indemnity for non-driving use
- no DOC usually provided
- excludes liability for damage to goods carried, the insured vehicle or items under the custody
Indemnity to Hirers
hire using a vehicle without a driver required indemnity for negligence
Cover for Trailers
- TP cover provided for trailers when towed by the insured vehicle
- detached trailers may require additional cover
Contingent Liability
- provides coverage when a person relies on another’s insurance, but it becomes inoperative
- example: when a principle hires a contractor and the contractor’s insurance fails
Occasional Business Use
- provides primary insurance for employees using personal or third-party cars for their employer’s business
- SD&P is excluded
Fleet Policies
- insures multiple vehicles owned by an organisation under a single policy
- examples: delivery vehicles, cars for sales representatives, forklifts
Motor Trade Insurance
- covers businesses such as car sales, repair shops and auto electricians
- main covers are road risks and internal risks
- TPD limit can vary between £1.2m and £5m
Breakdown Policy Requirements
- vehicles must be serviced, maintained and have a valid MOT certificate
- trailers and caravans must meet size, weight and towing specifications
Breakdown Insurance Exclusions
- cost of parts or labor not incurred roadside
- pre-existing breakdowns or unroadworthy vehicles at policy inception
- costs for locksmiths, tires or body glass specialists
- recovery from ditches, bogs, sand, snow or water
Uninsured Loss Recovery
Covers pursuing compensation for losses not covered by motor policies, such as alternative transport costs or PI claims
Before The Event (BTE) Legal Expenses Insurance
- taken out before an incident occurs
- covers legal costs for insured drivers and passengers pursuing or defending claims related to the insured vehicle
Prospects of Success
Means it is more likely than not that the insured person will recover damages, make a successful defence, or win an appeal
Legal Expenses Insurance Policy
Covers:
- damage to the car or personal belongings in it
- death or bodily injury to the insured person
Indemnity limits range from £50k to £100k
Legal Expenses Exclusions
- claims deliberately caused by insured
- costs incurred without the insurer’s agreement
- legal actions not agreed upon by the insurer
- fines, penalties or damages ordered by a court
- prosecutions for dishonesty, violence or drug/alcohol related offences
Legal Expenses Conditions
- appeals must be reported at least 10 working days before the deadline
- incident must be reported no later than 180 days after the insured becomes aware of them
- cover doesn’t apply if the insured can claim under another policy
ATE Legal Expenses Insurance
- obtained after an accident or dispute
- it covers the policyholder’s own and the opponents legal cost if they lose
Conditional Fee Agreements
- solicitors don’t charge the claimant if they lose, but may recover a success fee
- since April 2013, success fees are no longer recoverable from the losing party
- general damages for non-pecuniary loss were increased by 10% though up to 25% may be used to pay solicitor fees
