Chapter 4

Question 1

Uninsured losses

Answer 1

are those losses that an insured may suffer that are not directly covered by
a policy of insurance relevant to an insured event

Question 2

What is an Accident Report Form (ARF)?

Answer 2

An ARF is a form the insured may need to complete after reporting an accident, either over the phone or online.

Question 3

How are third-party claims for property damage handled in motor insurance?

Answer 3

The third party submits repair estimates; the insurer then assesses fault and may offer to handle the claim to control costs.

Question 4

What is the role of an insurer in Business Interruption (BI) claims?

Answer 4

The insurer covers the insured’s loss of profits following property damage caused by an insured peril, participating to minimize loss during the claim.

Question 5

What is a “claims-made” basis in professional indemnity insurance?

Answer 5

Coverage is triggered if a claim is made during the insurance period, regardless of when the event causing the claim occurred.

Question 6

What are “Special Damages” in personal injury claims?

Answer 6

Special Damages cover quantifiable losses like medical expenses and future loss of earnings.

Question 7

What is an “After the Event” (ATE) legal expenses cover?

Answer 7

ATE cover protects against the risk of losing a court case, covering legal costs if the claim is unsuccessful.

Question 8

What are the four court tracks under the Civil Procedure Rules (CPR)?

Answer 8

Small Claims, Fast Track, Intermediate Track, and Multi-Track.

Question 9

What are Pre-Action Protocols (PAP)?

Answer 9

PAPs are steps required before starting a court case, with strict timetables and penalties for non-compliance.

Question 10

What is the purpose of fixed recoverable costs (FRC) introduced in October 2023?

Answer 10

FRC limits the legal costs that can be recovered in fast-track and intermediate-track cases, ensuring predictability in legal expenses.

Question 11

What is the “MOJ/Claims Portal”?

Answer 11

It is an online system for handling employers’ and public liability claims up to £25,000, streamlining the process and capping legal costs.

Question 12

What must a claimant’s solicitor do in a personal injury claim under the Civil Procedure Rules (CPR)?

Answer 12

The solicitor must send a Letter of Claim to the defendant’s insurer, which must be acknowledged within 21 days, followed by a 3-month investigation period.

Question 13

What are “General Damages” in personal injury claims?

Answer 13

General Damages compensate for non-quantifiable losses like pain, suffering, and loss of amenity (PSLA).

Question 14

What happens if an insurer suspects fraud in a money claim?

Answer 14

The insurer may enlist specialist investigators to ensure there is no fraud involved before settling the claim.

Question 15

What is the significance of a property damage proviso in a Business Interruption (BI) policy?

Answer 15

It ensures that BI coverage is only available if the underlying property is insured, linking the BI claim to the property damage claim.

Question 16

What is the “basis of contract” clause, and how has the Insurance Act 2015 impacted it?

Answer 16

The clause converted pre-contractual representations into warranties. The Insurance Act 2015 now prohibits this, protecting policyholders.

Question 17

What does a “losses-occurring” basis mean in liability insurance?

Answer 17

Coverage is triggered by an event that causes a loss during the policy period, regardless of when the claim is made.

Question 18

What must be proven in a liability claim involving property damage?

Answer 18

The insurer needs a report on the alleged negligence, evidence supporting the claim amount, and possibly an inspection of the damaged property.

Question 19

What is “Qualified One-Way Costs Shifting” (QOCS)?

Answer 19

QOCS limits the circumstances in which a losing claimant must pay the defendant’s legal costs, providing protection in genuine claims.

Question 20

What is the role of pre-action protocols (PAP) under the Civil Procedure Rules (CPR)?

Answer 20

PAPs encourage the early settlement of disputes through a structured process, with strict timetables and penalties for non-compliance.

Question 21

What are “Special Damages” in personal injury claims?

Answer 21

Special Damages cover quantifiable losses such as medical expenses and future loss of earnings.

Question 22

How does “after the event” (ATE) legal expenses cover work?

Answer 22

ATE insurance covers the legal costs if a court action is unsuccessful, with the premium paid to the insurer before the action starts.

Question 23

What happens when a business interruption (BI) claim exceeds the indemnity period

Answer 23

The insurer’s liability ends when the indemnity period (e.g., 12, 24, or 36 months) ends, even if the business hasn’t fully recovered.

Question 24

What must be confirmed in a money claim before the insurer proceeds?

Answer 24

Proof of loss, including evidence the money was on the premises, details of the occurrence, and confirmation it was reported to authorities.

Question 25

What is the importance of the insurer’s “participation” in a Business Interruption (BI) claim?

Answer 25

The insurer may assist in minimizing the loss during the indemnity period, ensuring the business recovers efficiently.

Question 26

What are the four court tracks under the Civil Procedure Rules (CPR)?

Answer 26

The four tracks are small claims, fast track, intermediate track, and multi-track.

Question 27

How do professional indemnity insurance policies typically operate?

Answer 27

They are usually written on a “claims-made” basis, meaning coverage is triggered when a claim is made during the policy period, regardless of when the event occurred

Question 28

What does the insurer evaluate in a liability claim involving a third party injury?

Answer 28

The insurer assesses the degree of negligence, the injury’s extent, the medical prognosis, and any related losses like loss of earnings or required care.

Question 29

How did the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) affect ATE insurance premiums?

Answer 29

LASPO prohibited the recovery of ATE insurance premiums from the defendant, shifting the cost burden to the claimant.

Question 30

Sophie has a private car policy and is involved in a motor accident for which she is at fault. She receives a letter from the third party’s solicitors making a claim for personal injury. Any offer to pay damages may take account of:

Answer 30

the degree of negligence by each party.

Question 31

When a third party claimant has been injured and makes a claim, the liability insurer is likely to:

Answer 31

offer the third party rehabilitation that could include medical, vocational, or qualitative help.

Question 32

If George has a comprehensive private car policy, what would NOT be regarded as an uninsured loss in the event of a non-fault accident?

Answer 32

Recovery cost of taking his vehicle to an approved repairer.

Question 33

What type of policy is most often written on a claims-made basis?

Answer 33

Professional indemnity.

Question 34

An insurer appoints approved repairers because they:

Answer 34

reduce costs and improve quality.

Question 35

On what basis are public liability policies written?

Answer 35

On a losses-occurring basis.

Question 36

What key change was introduced by the Access to Justice Act 1999?

Answer 36

It set out the rules on recoverable costs so far as legal costs are concerned.

Question 37

For what period does an insurer’s helpline often operate?

Answer 37

24 hours a day

Question 38

Which of these is NOT a pre-action protocol under the Civil Procedure Rules?
Question 34Answer

a. Defamation.
b. Property damage.
c. Personal injury.
d. Professional negligence.

Answer 38

b. property damage