Chapter 4 Flashcards
What is the first step in the motor insurance new business process?
A. Issuing the certificate of insurance
B. Assessing risk and quoting a premium
C. Conducting a mid-term adjustment
D. Renewing the policy
B
What is required for a mid-term policy alteration to take effect?
A. The insured must provide written consent.
B. The insurer must issue an updated certificate of insurance.
C. A claims adjuster must verify the change.
D. The premium must remain unchanged.
B
When can an insurance policy be cancelled by the insurer?
A. Only at renewal
B. After providing reasonable notice
C. Without any notice
D. Only if the insured files a claim
B
What is the main purpose of the renewal process in motor insurance?
A. To increase the premium
B. To ensure continuous cover
C. To modify the insured vehicle’s use
D. To transfer the policy to another insurer
B
Which of these documents is mandatory for driving on UK roads?
A. Policy schedule
B. Proposal form
C. Certificate of motor insurance
D. Renewal invitation
C
What is the purpose of the Motor Insurance Database (MID)?
A. To store vehicle registration information
B. To ensure all vehicles on UK roads are insured
C. To record claims details
D. To manage premium calculations
B
What happens if a policyholder fails to pay the renewal premium?
A. The policy lapses automatically.
B. The policy remains active for 30 days.
C. The insurer must provide coverage for an additional 7 days.
D. The policy switches to basic third-party cover.
A
What is the significance of an Electronic Data Interchange (EDI) system in motor insurance?
A. It automates policy documentation and updates.
B. It processes claims automatically.
C. It handles premium refunds.
D. It replaces the certificate of insurance.
A
Which document provides details about the insured vehicle and risks covered?
A. Proposal form
B. Certificate of motor insurance
C. Policy schedule
D. Renewal notice
C
What is a voidable policy?
A. A policy that is invalid from the start
B. A policy that can be cancelled due to misrepresentation
C. A policy with zero premium
D. A policy that cannot be cancelled by the insurer
B
Which regulation governs the cancellation process for motor insurance policies?
A. Consumer Rights Act
B. Motor Vehicle Regulations
C. Insurance Conduct of Business Sourcebook (ICOBS)
D. Financial Ombudsman Guidelines
C
What is the role of intermediaries in the motor insurance new business process?
A. They only collect premiums.
B. They underwrite the risks.
C. They act as a link between insurers and policyholders.
D. They settle claims.
C
When must an insurer issue a new certificate of insurance?
A. At the time of claim settlement
B. When a policyholder requests a premium reduction
C. After a mid-term alteration affecting coverage
D. When the policyholder changes their address
C
What is the cooling-off period for motor insurance policies under ICOBS?
A. 7 days
B. 14 days
C. 30 days
D. No cooling-off period applies
B
What does “lapse of a policy” mean?
A. A policy is void due to misrepresentation.
B. A policy expires without renewal.
C. A policy is cancelled by the insurer.
D. A policy is transferred to another person.
B
What does mid-term adjustment refer to?
A. Updating the policy at renewal
B. Modifying policy terms during the active period
C. Changing the insurer
D. Issuing claims during the policy period
B
What does an insurance proposal form capture?
A. Only the insured vehicle details
B. The insured’s risk profile and requirements
C. The premium payment method
D. Information on previous claims
B
How are electronically issued documents typically verified?
A. Via the Motor Insurance Database (MID)
B. Using a digital signature
C. By submitting a physical copy
D. Through a phone call to the insurer
B
What happens if a certificate of insurance is not surrendered after policy cancellation?
A. The insurer must renew the policy automatically.
B. Legal action may be taken against the policyholder.
C. The policyholder must pay additional penalties.
D. The policy continues in force.
B
What does a renewal invitation typically include?
A. Claim settlement history
B. Renewal premium and updated terms
C. A detailed accident record
D. A mandatory cancellation form
B
A policyholder requests to add a new driver to their policy mid-term. What is the insurer’s next step?
A. Cancel the existing policy and issue a new one
B. Update the policy and issue a revised certificate of insurance
C. Refuse the request until renewal
D. Transfer the policy to the new driver
B
A business uses a fleet of vehicles and wants to modify the policy mid-term to include additional vehicles. What does the insurer issue?
A. New policy documents only
B. A revised schedule and certificate of insurance
C. A voided certificate of insurance
D. A renewal invitation
B
A policyholder fails to disclose a driving conviction during the proposal stage. How is the policy classified?
A. Cancelled automatically
B. A voidable policy
C. Invalid immediately
D. Converted to third-party cover only
B
An insurer wants to cancel a policy mid-term. What must the insurer provide?
A. Immediate cancellation with no notice
B. At least 7 days’ notice in writing
C. No explanation for the cancellation
D. Compensation for the policyholder
B
A vehicle owner sells their car and requests a refund of the premium. What happens next?
A. The policy lapses automatically.
B. The insurer may refund the premium after adjusting for the used period.
C. The policy remains active until renewal.
D. No refunds are issued.
B
A policyholder updates their policy to include business use during the policy term. What is the insurer most likely to do?
A. Issue a new policy
B. Adjust the premium and issue updated documents
C. Refuse the change until the renewal date
D. Cancel the existing policy and start a new one
B
An insured driver’s renewal notice includes a significantly higher premium than the previous year. What is the most likely reason?
A. The insurer decided to increase premiums across all policies.
B. The insured made multiple claims or presented higher risk factors during the year.
C. The Motor Insurance Database flagged the policyholder as uninsured.
D. The insured missed a payment during the policy term.
B
A policyholder requests cancellation of their motor insurance policy during the cooling-off period. What is the insurer’s obligation?
A. Provide a full refund of the premium minus any administrative fees.
B. Refuse the refund due to the short coverage period.
C. Issue a pro-rata refund based on the time the policy was active.
D. Require the policyholder to pay an early termination fee.
A
A motor insurance policy lapses due to non-payment of the renewal premium. What does this mean for the policyholder?
A. The policy remains active for an additional 14 days.
B. The policyholder is uninsured until a new policy is purchased.
C. The insurer will reinstate the policy once payment is made.
D. The policyholder can still make claims for incidents during the lapsed period.
B
A vehicle owner notices an error in their certificate of insurance after the policy is issued. What should they do?
A. Continue using the incorrect certificate until renewal.
B. Notify the insurer immediately to issue a corrected certificate.
C. Request a claim to cover the error.
D. Cancel the policy and purchase a new one.
B
What is a “cover note” in motor insurance?
A. A permanent policy document summarizing coverage
B. A temporary document issued pending the permanent certificate
C. A record for claims management purposes
D. An endorsement for international travel
B
What must a certificate of motor insurance include?
A. Advertising material of the insurer
B. Details of the insured vehicle and policyholder
C. Exceptions under Section 148 of the RTA
D. A pro-rata premium breakdown
B
What is a key function of the Motor Insurance Database (MID)?
A. Generating quotes for new policies
B. Tracking insured vehicles for regulatory compliance
C. Automating premium adjustments
D. Issuing renewal certificates
B
What is required under the Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA)?
A. Proposers must volunteer all material facts.
B. Proposers must take reasonable care not to misrepresent facts.
C. Insurers must avoid policies with any misrepresentation.
D. Policyholders must update MID records directly.
B
How are temporary vehicle substitutions typically handled in mid-term adjustments?
A. By issuing a separate policy
B. By applying pro-rata premium calculations
C. By refusing coverage until renewal
D. By suspending the existing policy
B
A policyholder’s car is stolen, and they want to cancel their policy. What must the insurer consider?
A. Whether a pro-rata refund is applicable
B. Whether the MID record should show the theft
C. If the cancellation is due to misrepresentation
D. If temporary renewal cover is possible
A
A business client makes multiple vehicle changes in a motor fleet policy. How are these typically handled?
A. By issuing immediate new certificates for each vehicle
B. Through periodic declarations and retroactive premium adjustments
C. By requiring individual policies for each new vehicle
D. By updating MID records after renewal
B
