Chapter 5- Pecuinary

Question 1

What is pecuniary insurance concerned with

Answer 1

Intangibles such as income, revenue or value

Question 2

What is the basis purposes of legal expenses insurance

Answer 2

To provide indemnity for costs arising out of the need to seek legal advise or to pursue or defend a civil action

Question 3

What are the two standard policy covers

Answer 3

1. Group legal benefit policies

2. Commercial legal protection policies

Question 4

Under group legal benefit policies what is employment cover

Answer 4

Defence of any claim brought against a member in the course of their employment

Defence and compensation awards resulting from specified legislation

Costs of claiming for compensation arising out of members employment eg wrongful dismissal

Question 5

Under group legal benefit policies what are the 4 sections of cover

Answer 5

1. Employment cover
2. Personal cover

4, motor cover

4. Conveyancing cover

Question 6

What are commercial legal protection policies

Answer 6

Designed to cover firms or companies in their capacity as employers, manufacturers; property owners etc

Question 7

What are the 5 main sections of commercial legal protection policies

Answer 7

1. Employment cover- defending an action by an employee against the firm
2. Criminal prosecution defence cover- defences an action brought against the company usually under health and safe ty at work legislation

3 property disputes cover

4. Motor cover
5. Patents, registered designs, copyright and trademarks cover

Question 8

What are the 4 optional extensions for commercial legal protection policies

Answer 8

1. Defending libel and slander charges
2. Involvement in public enquiries

3, investigations by professional bodies

4. Taxation proceedings

Question 9

What are the limitations for legal expenses cover

Answer 9

No cover where legal action is pursued against advice

Question 10

What are the basic features of BI

Answer 10

The monetary amount that needs to be insured and the time the interruption will affect the business

Question 11

What is the turnover in relation to BI

Answer 11

Turnover is the total income arising from the activities of the business

Question 12

How is the turnover broken down in regards to BI

Answer 12

Costs are divided between those that vary in direct proportion of the turnover and those that not vary in this way

Question 13

What two items may result in a loss to the insured under BI

Answer 13

Net profit and fixed charges

Question 14

What terms do insureds use for the addition of net profit and standing charges

Answer 14

‘Gross profit’

Question 15

What is the ‘difference basis of cover’ under BI

Answer 15

Works by deducting the uninsured working expenses (the variable charges) from the turnover.

Question 16

What are the two basis of fixing sums insured under business interruption

Answer 16

1- taking the projected turnover for the forthcoming years and assuming a worst case scenario

2- declaration linked- declare figures for the forthcoming then a one third uplift is automatically taken into account

Question 17

What is increase cost of working cover

Answer 17

Where certain expenses will increase following loss or damage

Question 18

What is a material damage warranty

Answer 18

A policy covering the physical damage must be in place for BI to be covered

Question 19

Why does material damage warranties not always apply to engineering business interruption

Answer 19

Insurer knows that there are fund for completing the rebuild

Insurer will obtain the benefit of the warranties that may apply to the material damage cover

Question 20

What are the three most common business interruption policies

Answer 20

Fire and special perils

All risks

Engineering

Question 21

What are the standard perils for a business interruption policy

Answer 21

Same as covers under a material damage policy but can be extended to include

The explosion of ANY boilers on the premises

Question 22

What are the special perils for a business interruption policy

Answer 22

Relating to engineering cover:

Explosion and collapse of steam pipes

Explosion of vessels

Collapse or boilers

Overheating or tubes

Overheating of boilers

Question 23

What are the extensions to an all risks business interruption policy

Answer 23

1. Specified suppliers
2. Unspecified suppliers
3. Specified customers
4. Transit

5, prevention or access s

6, public utilities

7. Notifiable disease, vermin, defective sanitary arrangements

Question 24

What are the two perils covered under an engineering BI Policy

Answer 24

Failure of the public supply of gas, electricity etc

Sudden and unforeseen damage from an accidental cause

Question 25

What 4 things are excluded on an engineering BI policy

Answer 25

Perils covered by the standard fire and special perils policy

General market exclusions (war etc)

A scheme which rations supplies

Deliberate act of a supply authority

Question 26

What, in one sentence, is the basic purpose of legal expenses insurance?

Answer 26

Legal expenses insurance provides indemnity for costs arising out of the need to seek legal advice or to pursue or defend a civil action

Question 27

What are the two main types of policy cover available in respect of legal expenses insurance?

Answer 27

The two main types of cover are group legal benefit policies and commercial legal protection policies

Question 28

What optional extensions are available to an insured when taking out legal exp need insurance?

Answer 28

Libel and slander protection
Cover against the costs of involvement in public enquiries
Cover again the cost of investigations by professional bodies
Cover against the cost of taxation proceedings

Question 29

What is the purpose of business interruption insurance?

Answer 29

Business interruption insurance covers the actual or potential loss of earnings (‘gross profit’) and additional expenses incurred as a result of material loss

Question 30

In what way do the standard perils covered by the business interruption policy differ from the standard perils in the material damage policy?

Answer 30

The business interruption policy cover explosion of both domestic and non-domestic boilers, whereas the material damage policy covers explosion of domestic boilers only

Question 31

Under a typical legal expenses policy, what limit of cover, if any, usually applies within the period of cover?
A) cover is usually unlimited
B) overall cover is usually limited but there is not further limit per claim
C) overall cover is usually unlimited but that is a limit per claim
D) overall cover is usually limited and there is also a limit per claim

Answer 31

C

Overall cover is usually unlined, but there is a limit per claim

Question 32

What are two dimensions of business interruption cover?

Answer 32

• the monetary amount that needs to be insured

- the time that the interruption will affect the business

Question 33

What is the effect of the material damage warranty in relation to the inclusion of non-domestic boilers or economisers as a policy extension to the standard business interruption policy?

Answer 33

Since the material damage warranty applies, it is essential, if the insured has non-domestic boilers or economisers, that they have material damage cover against explosion in respect of these items. Otherwise they will lose the benefit of the additional cover. This applies if cover is required for explosion damaged from neighbouring premises