Chapter 6

Question 1

What factors make up a insurance premium

Answer 1

-claims ratio
-Fixed costs - building hire and staffing wages
-variable costs - agent commission, claims handling costs

Question 2

What do the 4 categories of salvage stand for?

Answer 2

BANS
B - scrap or broken up and usageable parts recycled
A - scrapped
N - Non structural damage
S - structural damage

Question 3

Which of the 2 salvage categories must be reported to the DVLA

Answer 3

A and B only

Question 4

With accidental damage claims, an engineer is unlikely to be appointed unless the estimated repair cost is at least:

Answer 4

£500

Question 5

What types of complaint can be referred to the Financial Ombudsman Service?

Answer 5

All complaints are acceptable

Question 6

What is another name for the amount of any third party liability claim?

Answer 6

Quantum (The lord QAL, quantum of liability)

Question 7

What is an insurer most likely to do if an insured provided forged documentation to support their claim on a motor policy?

Answer 7

Decline the claim, void the policy and retain all premiums paid.

Question 8

If a motor policy contains a condition requiring the policyholder to take all reasonable steps to protect the car from loss or damage and to keep it in a roadworthy condition, what must the insurer demonstrate if it wishes to use this to repudiate a claim?

Answer 8

That a high level of reckless disregard had taken place and, as a result, this had resulted in the loss.

Question 9

The law on contributory negligence was established by what act?

Answer 9

The Law Reform Act

Question 10

What does the law reform act do?

Answer 10

It states that a persons damages will be reduced by the amount that person may be responsible for the loss. (1 car speeding but other car falsely indicates causing an accident, both have some form of fault and blame).

Question 11

What happened in the case of Froome Vs Butcher?

Answer 11

The third party claiming for damage was not wearing a seatbelt and therefore his damages settlement was reduced.

Question 12

What happened in the case of Smith V Finch?

Answer 12

Third parties damages were reduced for not wearing a helmet as the claim could of been reduced should he of been wearing one

Question 13

With most private car policies, the amount the insurer will pay in the event of a total loss is the market value of the vehicle at the time of the loss or damage. This reflects which of the principles of insurance?

Answer 13

Indemnity.

Question 14

When investigating a third party claim, what is the main benefit of undertaking any discussions on a ‘without prejudice’ basis?

Answer 14

Negotiations can be undertaken in a free and open manner.

Question 15

How will an insurer treat a claim if an insured’s car is found burnt out after being stolen?

Answer 15

As a theft claim

Question 16

The policyholder will most likely be considered at fault if:
Question 12Answer

a. the accident occurs in a car park.
b. the accident occurs on a roundabout.
c. he runs into the back of the car in front.
d. he collides with another vehicle when overtaking.

Answer 16

he runs into the back of the car in front.

Question 17

The benefits of an insurer operating a panel of recommended repairers do NOT include:
Question 13Answer

a. fixed repair costs for different types of damage.
b. guaranteed courtesy cars.
c. guaranteed workshop availability.
d. close working relationships.

Answer 17

fixed repair costs for different types of damage.

Question 18

Which fraud prevention body runs Cheatline?

Answer 18

The Insurance Fraud Bureau.

Question 19

The Ministry of Justice Reforms [for low value RTA personal injury claims] applies to claims with a value of what?

Answer 19

Between £1,000 and £25,000.

Question 20

When is an insurer most likely to investigate a theft claim further?

Answer 20

When the keys location were not known at the time of loss

Question 21

The current Motor Insurance Anti-Fraud and Theft Register [MIAFTR2] does NOT have links to which database or register?

Answer 21

The FCA.

Question 22

The cost of parts is roughly what percentage of the average cost of motor vehicle repairs?

Answer 22

50%

Question 23

Which piece of legislation now means that saying ‘sorry’ after an accident cannot be construed as an admission of liability?
Question 21Answer

a. The Road Traffic Act 1991.
b. The Third Parties [Rights Against Insurers] Act 2010.
c. The Insurance Act 2015.
d. The Compensation Act 2006.

Answer 23

The Compensation Act 2006.

Question 24

Which policy clause is most relevant to the handling of any private car policy claim?

a. Admission of liability.
b. Contribution.
c. Arbitration.
d. Change of vehicle.

Answer 24

Admission of liability.

Question 25

When collecting her car from a recommended repairer, what is the name of the document that an insured is asked to sign, confirming that she has checked and approved the repair?

Answer 25

A satisfaction note.

Question 26

What do insurers refer to when calculating the market value of the vehicle?

Answer 26

Motor guides.

Question 27

Under what circumstances is the insured most likely to be asked to make a contribution due to betterment?

Answer 27

Damage to a battery, tyres or exhaust.

Question 28

Under the Ministry of Justice Reforms [for low value RTA personal injury claims], how long do insurers have to respond after receiving a Claim Notification Form?

Answer 28

15 working days. (RECEIVING A CLAIM = 15 letters)

Question 29

Which condition must exist for the principle of contribution to apply to a motor policy?

Answer 29

Each policy must insure the same interest in the subject matter of insurance.

Question 30

Which section of a motor policy is NOT subject to the principle of indemnity?

Answer 30

Personal accident benefits

Question 31

if an insured is VAT registered, the insured is also responsible for paying the VAT on their vehicle repair, true or false?

Answer 31

True

Question 32

What is subrogation?

Answer 32

Subrogation is where the insurer takes responsibility for the recovery of costs from the third party rather than the insured doing it.

Question 33

What must a person demonstrate to prove they have insurable interest?

Answer 33

Subject Matter

Question 34

Name 3 of the sections included within the accident report form.

Answer 34

Policy details
Policyholder details
Driver
Vehicle
USe
damage to own vehicle
details of accident
other parties involved

Question 35

What 3 sections of the policy wording are particularly important to claims?

Answer 35

Co-operation - asking for co-operation from the insured
Admission of liability - Requires no admission of guilt to be made by the policyholder
Arbitration - the policy calls for any dispute over the amount of the claim to be referred to an arbitrator before any legal action.