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CII IF3 > Chapter 5: Insurance Products - Personal Insurances > Flashcards

Chapter 5: Insurance Products - Personal Insurances Flashcards

1
Q

What are the four different levels of cover available for private motor insurance?

A
  1. Road Traffic Act only (minimum cover - £1.2m third party property limit, unlimited limit for third party injury)
  2. Third party only (£20m limit for third party property, indemnity to employer if business use is permitted, indemnity for liability of passengers, and legal costs)
  3. Third party, fire, and theft (the above + covers fire and theft of the vehicle)
  4. Comprehensive (“all-risks” but with exceptions)
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2
Q

What optional extensions are typically available for private motor insurance?

A 
Courtesy car
Glass (included in comprehensive, optional for others)
Personal belongings
Foreign use
Legal cover
Breakdown cover
Caravans and trailers
Extended personal accident
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3
Q

What are the main differences between private motor insurance and private motor cycle insurance?

A

Motor cycle insurance does not cover theft of accessories or spare parts unless the actual cycle is stolen

There is usually no personal accident, medical expenses or personal effects cover. If there is personal accident it may be restricted.

Some motor cycle policies also do not provide indemnity to employers even when business use is permitted

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4
Q

What are the main types of commercial vehicle insurance?

A
  1. Passenger carrying vehicles
  2. Goods carrying vehicles
  3. Construction vehicles (also called special vehicles)
  4. Agricultural vehicles
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5
Q

What limits of liability for third party property are usually included in:

A) Private motor car insurance?

B) Commercial vehicle insurance?

A

A) £1.2 million for RTA only, £20 million otherwise

B) £1.2 million - £5 million

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6
Q

What additional considerations apply to commercial vehicle insurance but not to private motor insurance?

A

Loading and unloading goods

Indemnity to driver - usually the insured will be the company but the driver also has liability and needs cover

Indemnity to user - not always the same as the driver

Indemnity to passengers

Legal costs

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7
Q

What are some common optional extras for commercial motor insurance?

A 
Medical expenses
Glass cover - included but can extend limits
Loss of use
Increased third party property limits
Personal belongings
Sheets/tarpaulins/ropes
Indemnity to hirers
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8
Q

What is fleet insurance?

A

A type of commercial motor insurance where multiple vehicles are covered under the same policy, normally 10 or more although some insurers offer mini fleet insurance for 5 or more

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9
Q

What is the purpose of fleet insurance?

A

To enable more accurate rating and to reduce administration by having one policy rather than one for each vehicle

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10
Q

What additional covers are often included in a commercial motor insurance policy as opposed to a private one?

A
  1. Joint insured clause
  2. Roadside assistance
  3. Additional helplines/handing/admin
  4. Contingent third party insurance (indemnity to employer when an employee is using their own vehicle for business but their personal insurance is inoperative)
  5. Occassional business use (indemnity to employee when using their own vehicle for business but their personal insurance does not cover business use)
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11
Q

What are the 3 main types of health insurances?

A
  1. Personal accident
  2. Sickness
  3. Medical expenses
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12
Q

How do personal accident and sickness policies differ from indemnity policies?

A

They are benefit policies - they pay an agreed sum if an insured event occurs rather than seeking to return the insured to the same financial position

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13
Q

Why might an employer take out a group personal accident or sickness policy on their employees?

A

To cover the costs of hiring temporary replacement staff

To cover lost revenue due to drop in productivity

To cover salary to the employee

To cover recruiting and training costs for replacement

etc

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14
Q

What is a significant common market exclusion for personal accident and sickness policies?

A

Pre-existing conditions are excluded - the insurer does not need to state what these are, it is enough to expressly say pre-existing conditions are excluded unless agreed

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15
Q

What age ranges are personal accident and sickness policies typically limited to?

A

Normally 16-65 but can vary between 16-70 for accidents and 16-60 for sickness

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16
Q

What does a personal accident policy cover?

A 
Death
Loss of limbs, eyesight, speech or hearing
Permanent total disability
Permanent partial disability
Temporary total disablement
Temporary partial disablement
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17
Q

How is a personal accident policy normally paid out?

A

The pre-agreed benefit amount listed in the policy is normally paid in a lump sum in the event of death, loss of limbs or permanent partial or total disability

Temporary total or partial disablement are paid in weekly benefits

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18
Q

In the event of partial disablement, what do insurer’s use to calculate payments?

A

The continental scale, which sets out a percentage of the benefit payable under certain conditions eg losing one toe or losing sense of smell

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19
Q

How are sickness or illness policies usually offered?

A

As an extension to a personal accident policy although they are also available as standalone policies

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20
Q

What does a sickness policy provide?

A

Weekly benefits if the policyholder is unable to perform any parts of their normal work

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21
Q

What common extensions may be offered to a personal accident or sickness policy?

A

Disappearance - death benefits paid out if the insured disappears for an agreed period

Medical costs, including family travel costs to hospital

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22
Q

What are the standard exclusions for a personal accident or sickness policy?

A

Self inflicted injury/disease
Events under the influence of alcohol
Childbirth/Pregnancy
Sexually transmitted diseases including HIV
Pre-existing conditions
Motor cycling, racing, and extreme sports

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23
Q

What is the purpose of medical expenses insurance?

A

Provides medical cover for private medical treatment (ie outside the NHS)

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24
Q

What is typically covered under a medical expenses policy?

A 
Hospital charges (surgery & theatre, nursing & after care, etc)
Specialist fees (consultants and surgeons)
Additional costs (eg ambulance fees)
25
Q

What are commonly excluded from a medical expenses policy?

A

Pre-existing conditions

Long term residential care

26
Q

What are the two main types of private household insurances?

A

Buildings insurance

Contents insurance

27
Q

What kinds of property is normally included in private buildings insurance?

A

The main structure of the house, as well as garages, gardens, outbuildings, sheds, greenhouses, inbuilt swimming pools, windows, fitted kitchens etc

In general, anything you would have to leave when moving house

28
Q

What are commonly covered perils under private buildings and contents insurances?

A
  1. Fire/explosion/lightning
  2. Storm + flood
  3. Escape of water or oil (pipes, water tanks, apparatus, domestic equipment eg washing machine)
  4. Falling trees/branches (excludes walls, hedges etc)
  5. Theft
  6. Impact
  7. Subsidence/ground movement/slip
  8. Accidental damage to utilities (drains, pipes and cables)
  9. Fees (eg legal, architects, surveyor, removal)
  10. Loss of rent
  11. Riot, civil commotion, etc
  12. Damage caused by collapse of aerials
29
Q

For private buildings insurance what is meant by the unfurnished/unoccupied exclusion?

A

Certain perils are excepted if the building is unoccupied or unfurnished for more than 30/60 days depending on the policy wording. This is because these risks significantly increase when the house is unoccupied. For example escape of water

30
Q

What does private contents insurance generally cover?

A

Households goods and personal possessions, including any fittings and fixtures, belonging to the insured or family members living in the property

31
Q

What are the main differences in coverage between a private buildings insurance and a private contents insurance policy?

A

For contents insurance theft must usually involve forced or violent entry, and exclusions usually apply to accidental damage (eg clothes not covered)

32
Q

What two kind of sub-limits normally apply within private contents insurance?

A

There are limits on single articles of value, normally 5% of sum insured

There is normally a total valuables limit of one third of sum insured

33
Q

What kind of items are normally explicitly listed in a contents insurance policy?

A

Valuable items, normally those over £5000

34
Q

Under a standard contents insurance policy what happens if the property is removed from the house?

A

Usually property is still covered if only temporarily removed from the premises, with certain exclusions (such as storm/flood in transit/on the person or theft except at certain locations such as a bank, family residence, or workplace)

35
Q

What are some usual exclusions to private contents insurance?

A

More specific insurance (property covered under another policy)

Medals and coins (unless specified)

Motor vehicles

Livestock (except horses)

36
Q

What liability is covered under private household insurances? What typically are the limits of this liability?

A

Buildings: Liability of the owner and liability under the Defective Premises Act 1972. For example if someone was injured on your property due to your negligence

Contents: Liability incurred by the insured, both on their premises and off. For example if you accidentally poked someone in the eye with your umbrella

Usually a limit of at least £1 million if not more

37
Q

What are some common extensions to private household insurances?

A

All risks (both specified and unspecified items)
Money and credit cards
Bicycles (up to £500 each)
Domestic animals (horses/ponies/dogs/cats)
Freezer/fridge contents
Caravans
Sports equipment
Small pleasure craft (usually under 23ft with a maximum speed of 17 knots)
Legal expenses
Personal accident and hospital benefits
Creditors insurance

38
Q

What is a FloodRe?

A

A re-insurance scheme set up jointly by the government and insurers designed to ensure properties at risk of flooding still have access to affordable cover

39
Q

Who owns and manages FloodRe?

A

Participating insurers

40
Q

How is FloodRe funded?

A

Via a levy on participating insurers. The levy is £180 million per year and insurers are responsible for a percentage corresponding to their share of the household insurance market

41
Q

How is the FloodRe levy passed on to policyholders?

A

The higher the risk of flooding, the more the policyholder pays. The amount is also tied to their council tax bound and set out in legislation

42
Q

What properties are eligibly for the FloodRe scheme?

A

Residential properties built prior to 2009

43
Q

What risks are usually covered under private travel insurance?

A

Loss of deposits due to cancellation
Baggage/property including delayed baggage
Travel interruption/delay
Personal liability
Medical expenses
Personal accident benefits (usually £10-25k)
Hospital benefits

44
Q

What are some common optional extensions to private travel insurance?

A

Loss of passport
Lack of services/amenities
Failure of tour organiser
Legal expenses

45
Q

What are some common exclusions of private travel insurance?

A 
Pregnancy and childbirth
Suicide
Physical/mental disability
Confiscated luggage
Damage to fragile objects
Hazardous activities from personal accident benefits
46
Q

What is extended warranty insurance?

A

Covers repairs for electrical and mechanical defects to goods beyond their usual warranty period. Essentially extends the manufacturer’s guarantee

Can also be purchased to cover all an insured’s electrical goods

47
Q

What is a typical condition and limit for an extended warranty insurance?

A

Repairs must be carried out by the supplier, sum insured £2,500

48
Q

What are the usual exclusions for an extended warranty insurance?

A

Risks covered by a household insurance policy
Negligent handling
Failure to comply with manufacturer’s instructions
Repair to bulbs, aerials, external wires, knobs, handles, driving belts, etc

49
Q

What are some common exceptions for private motor insurance?

A 
Wear and tear
Mechanical/electrical failure
Depreciation
Loss of use
Tyre damage from blowouts or punctures
50
Q

What does the European Union Third Motor Insurance Directive state?

A

It is compulsory to have the greater of the minimum cover of the country in which the vehicle is registered or the minimum cover of the country in which the vehicle is being used

51
Q

What optional extensions are available for a private motor cycle policy?

A

Riding other cycles

Trailers

52
Q

What is a common condition of extended warranties insurance?

A

The repair must be carried out by the supplier

53
Q

You lose a finger in an accident (ouch). You have a standard personal accident policy with standard permanent partial disability benefits. What percentage of the death benefit would you normally receive?

A

20%

54
Q

What is the normal definition of a small craft under a standard household policy extension?

A

A vessel that does not exceed 23 feet with a designed speed not in excess of 17 knots

55
Q

What is the difference in definition and benefits between temporary total disability and temporary partial disability?

A

Temporary total disablement is when an insured is temporarily unable to work. Temporary partial disablement is when an insured is unable to perform their normal role but can still perform some sort of role at work.

TTD is paid in weekly benefits. TPD the weekly benefits are reduced a set amount (usually 30%) since the insured can still perform certain tasks

56
Q

Does an insured have to prove they have suffered a financial loss in order for a benefit policy to pay out?

A

No - it is enough for an insured event to occur

57
Q

What is the maximum period for which weekly benefits may be payable under a standard personal accident & sickness policy?

A

104 weeks (2 years)

Some insurers may pay for up to 5 years

58
Q

Under a standard personal accident or sickness policy how long after the accident date can something be classified as permanent total disablement?

A

52 to 104 weeks depending on insurer

CII IF3 (11 decks)

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