Chapter 6 Flashcards
Personal Insurances covered in the context of Consumer Policies
• household
• household contents
• travel
• pets
• vehicles
Typical Value and Frequency of Personal Insurance Claims
low value and high frequency
Five Key Questions claims handlers need to ask
• who
• when
• where
• how
• what
Preliminary Assessment Outcomes
• rejection
• acceptance with conditions
• input from third parties
Why might a Loss Adjuster be appointed?
• to investigate the cause
• arrange repairs
• set an initial reserve
• assist with alternative housing
Obligations on the Insured
the claims notification provisions in the policy govern the nature and the timeframe of the insured’s initial obligation to provide information relating to their claim
Assessing Coverage
• date and time of loss
• notification time
• location
• entitled to indemnity
• insured peril
• complied with all conditions or warranties
• does it match with the underwriting file
Giving Instructions to External Experts
• clear instructions
• analysis of why their help is needed
• diary system to track progress
Loss Adjusters in Fire or Flood claims
fire:
• to investigate all circumstances
• check for possible arson
• report findings confidentially to the insurer
floods:
• assess flood damages
• arrange alternative accommodation if covered
• manage repairs
• provide regular reports
Supplier Panels for External Advisers
• reliable services with agreed standards
• pre-negotiated fees
• consistent service level agreements
Defence Lawyer Represents
both the insured (to defend them) and the insurer (for advisory purposes)
Independent Loss Adjuster
they must act impartially according to the Chartered Institute of Loss Adjusters’ (CILA) rules
Guidelines for Solicitors and Loss adjusters
• solicitors regulation authority’s code
• CILA guidelines
What must be included in clear instructions to an expert?
• purpose of appointment
• scope of authorisation
• expected information or advice outcomed
Insurers’ internal guidelines for using external advisers
• protocols on adviser usage
• delegated authority
• preferred firms or service providers
Loss Adjuster Tasks
• liaise with insured
• advise on loss quantum
• investigate cause
• oversee repairs
• negotiate settlements
• handle multiple roles
Letter of Instruction to an expert
• policy/claim identification
• claim details
• clear instructions
• deadlines
• report format
• fee structure
Internal Experts
• field adjusters
• claims adjusters
• surveyors
• forensic accountants
• fire investigators
• injury specialists
External Sources
• police reports
• fire brigade reports
• meteorological office
• environment agency
• news outlets
Additional Information for Fire Claims
• fire brigade and police reports
• specialist fire investigator reports
• surveyor estimates
Specific Information for Flood Claims
• confirmation of flood occurrence
• depth of damage
• local rental or drying-out resources
Sum Insured or Limit of Liability
the maximum amount recoverable under a policy, even if the loss exceeds the limit
UK Road Traffic Act 1988
requires motor insurers to provide unlimited cover for death or bodily injury from road vehicle use
Other Policy Limits
sub-limits for specific types of property, like valuables, often limited to a percentage of the total sum insured
Inner Policy Limit
a specific cap within sections of the policy, such as limits for valuables or specific types of coverage
Pairs and Sets Clause
a policy term that restricts cover to only the damaged item in a set, not replacing the entire set
FOS influenced this as it has ruled insurers may need to cover a full set if it’s crucial to the insured’s position
Average Clause
a provision where, if underinsured, the insured is considered partly self-insured and claims are paid proportionately
Common Limitations on Claims Settlements
excesses and franchises
Excess
an amount the insured must pay first in any loss, either as a fixed sum or a percentage
encourages care, reduces small claims for insurers and lowers the overall insurance cost
Franchise
excludes payments for losses below a certain amount, but once exceeded, the entire loss is covered in full
they are uncommon as they may increase the moral hazard, tempting the insured to inflate claim values
Depreciation
a reduction in claims payments reflecting wear and tear on an item, paying only its current market value
New for Old coverage
where insurers pay for a new replacement instead of the depreciated value, for an additional premium
Repair/Replacement preventing fraud
it prevents insured individuals from inflating claims for cash profit
Agreed Value Policies
policies where the value to be paid out for a total loss is pre-determined and agreed upon in advance
Agreed Value Items
for hard-to-value items such as antiques, fine art or vintage vehicles
Agreed Value Policies benefits on Claim Settlements
it avoids needing proof of value, deductions for depreciation or addressing underinsurance in a total loss
Disputes on the Denial of Coverage
the complaint may go to the Financial Ombudsman Service or in rare cases, go to litigation
FOS role in insurance disputes
it handles complaints from retail consumers and small businesses if they are unsatisfied with the insurer’s response
Legal Framework if dispute goes to court
civil procedure rules, since insurance policies are contracts, and disputes are handled in civil courts
