Chapter 3 - Package Policies Flashcards
what does homogeneity of risks mean?
the situation where many risks share characteristics and follow similar trends
what are the 2 ways of settling household claims?
- indemnity
- reinstatement
how does indemnity work for household claims?
a deduction is made for wear and tear - the amount paid is the amount it would cost to replace the item with something the same age and same condition
how does reinstatement work for household claims?
the full cost of replacing the item as new is paid - most insurers make a deduction for wear and tear and sometimes if sums insured are inadequate
what should the building sum insured represent?
the rebuild cost at the time rebuilding is complete
in the terms of household insurance, how is building defined?
the main structure of the private dwelling including garages, sheds, greenhouses and other outbuildings (anything that would be left behind when moving)
what are example of perils on buildings?
fire, lightning, explosion and earthquake, riot and malicious damage, storm/flood, falling trees, escape of water and theft
what cover is usually excluded for unoccupied buildings?
loss or damage while the building is unfurnished or unoccupied for more than 30 - 60 days
what is excluded under storm/ flood?
damage caused by frost, subsidence and damage to gates, fences and hedges - always has an excess
what does falling trees cover exclude?
damage to walls, gates, fences and hedges
what does escape of water cover?
bursting or over flowing of water tanks and pipes and includes any fixed domestic water and heating installations, washing machines and other equipment
what does escape of water exclude?
damage while the building is unfurnished or unoccupied for more than 30 - 60 days
what does escape of oil cover?
escape of oil from any fixed oil fired heating system
what does impact cover include?
impact or collision from aircrafts/ aerial devices, road vehicles or animals
what does impact cover usually exclude?
damage by pets
what does subsidence/ ground heave slip exclude?
loss or damage caused by:
- normal shrinkage or settlement
- coastal or riverbank erosion
- demolition or structural repair
what is usually the excess for subsidence?
£1k
what does accidental breakage of glass and sanitary fixtures include?
accidental breakages of fixed glass in windows, doors, skylights, conservatories etc that form part of the building also includes baths and other sanitary fittings
what is legal fees and architects/surveyors fees and cost of debris removal cover?
covers reasonable legal fees incurred in the reinstatement of the building and also the removal cost of clearing debris
what is loss of rent cover?
cover provided in respect of ground rent for a max of 2 years and loss of rent for any part that becomes uninhabitable
what can loss of rent also include?
reasonable costing alternative but similar accommodation while the premises is uninhabitable - usually capped at 10/15% of building sum insured
what is the accidental damage extension?
most insurers offer this subject to a higher premium rate and subject to an excess
what does the accidental damage extension exclude?
damage whilst property is let, wear and tear, damage caused by pets and vermin
how is contents defined?
household goods and personal effects belonging to the insured or family member living in the property
when is theft or attempted theft of cash usually excluded under contents?
if there is no forcible and violent entry/ exit
what is typically covered automatically under contents insurance?
- temporary removal
- clothing or personal effects
- accidental breakage
- home office equipment (usually 5k limit)
what is a ‘single article limit’
no picture/art, jewellery etc will be treated as a greater value than 5% of the building sum insured or than a fixed amount
what is a ‘valuable limit’
the total value of precious metal jewellery may be restricted to 1/3 of the total contents sum insured
what exclusions normally apply to contents insurance?
- property insured under another policy
- motor vehicles
- livestock
- medals/ coins (unless specifically insured)
what extensions are available for contents insurance?
- accidental damage to entertainment equipment
- accidental damage while in the course of removal
what limit applies to accidental injury and accidental damage to material property?
a limit of indemnity of £2 million applies to any one claim
for employers legal responsibilities limit is at least £10 million
what is an ‘all risks’ basis?
property is insured against any peril that is not specifically excluded
what is the definition of unspecified items?
cover is provided away from the specified adress
what are specified items?
items which exceed the unspecified single article limit or to which special terms apply - the sum insured should represent the replacement value
what are the exclusions for personal possessions?
- wear, tear and depreciation
- corrosion
- mechanical and electrical breakdown
what is the general limit of bicycles unless the value is specified?
£500 - £1000
what does the money extension include?
‘all risks’ cover that is wider than under the standard contents sections - includes accidental loss
what cover is generally excluded on bicycles?
- loss or damage to parts/ accessories
- used for competitive events
- theft whilst left unattended
what are some risks covered by travel insurance?
cancellation charges, injury, death, medical fees following illness and loss of personal possessions
is there a standard market wording for travel policies?
no
what does baggage cover include?
loss or damage to personal baggage - sum insured is usually between 1-2k
what does loss of deposits cover mean under a travel policy?
provides reimbursement of deposits and payments due to necessary and unavoidable cancellation beyond their control
what does travel interruption cover?
failures of public transport to deliver the insured to the departure point
in commercial insurance, who do package policies cater for most?
small businesses
what property is covered under commercial package policies?
almost everything in the premises including stock
what is business interruption?
cover for loss of trading profit and increases in the cost of working due to an interruption caused by an insured peril
