Chapter 6

Question 1

Personal Insurances covered in the context of Consumer Policies

Answer 1

• household
• household contents
• travel
• pets
• vehicles

Question 2

Typical Value and Frequency of Personal Insurance Claims

Answer 2

low value and high frequency

Question 3

Five Key Questions claims handlers need to ask

Answer 3

• who
• when
• where
• how
• what

Question 4

Preliminary Assessment Outcomes

Answer 4

• rejection
• acceptance with conditions
• input from third parties

Question 5

Why might a Loss Adjuster be appointed?

Answer 5

• to investigate the cause
• arrange repairs
• set an initial reserve
• assist with alternative housing

Question 6

Obligations on the Insured

Answer 6

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

Question 7

Assessing Coverage

Answer 7

• 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

Question 8

Giving Instructions to External Experts

Answer 8

• clear instructions
• analysis of why their help is needed
• diary system to track progress

Question 9

Loss Adjusters in Fire or Flood claims

Answer 9

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

Question 10

Supplier Panels for External Advisers

Answer 10

• reliable services with agreed standards
• pre-negotiated fees
• consistent service level agreements

Question 11

Defence Lawyer Represents

Answer 11

both the insured (to defend them) and the insurer (for advisory purposes)

Question 12

Independent Loss Adjuster

Answer 12

they must act impartially according to the Chartered Institute of Loss Adjusters’ (CILA) rules

Question 13

Guidelines for Solicitors and Loss adjusters

Answer 13

• solicitors regulation authority’s code
• CILA guidelines

Question 14

What must be included in clear instructions to an expert?

Answer 14

• purpose of appointment
• scope of authorisation
• expected information or advice outcomed

Question 15

Insurers’ internal guidelines for using external advisers

Answer 15

• protocols on adviser usage
• delegated authority
• preferred firms or service providers

Question 16

Loss Adjuster Tasks

Answer 16

• liaise with insured
• advise on loss quantum
• investigate cause
• oversee repairs
• negotiate settlements
• handle multiple roles

Question 17

Letter of Instruction to an expert

Answer 17

• policy/claim identification
• claim details
• clear instructions
• deadlines
• report format
• fee structure

Question 18

Internal Experts

Answer 18

• field adjusters
• claims adjusters
• surveyors
• forensic accountants
• fire investigators
• injury specialists

Question 19

External Sources

Answer 19

• police reports
• fire brigade reports
• meteorological office
• environment agency
• news outlets

Question 20

Additional Information for Fire Claims

Answer 20

• fire brigade and police reports
• specialist fire investigator reports
• surveyor estimates

Question 21

Specific Information for Flood Claims

Answer 21

• confirmation of flood occurrence
• depth of damage
• local rental or drying-out resources

Question 22

Sum Insured or Limit of Liability

Answer 22

the maximum amount recoverable under a policy, even if the loss exceeds the limit

Question 23

UK Road Traffic Act 1988

Answer 23

requires motor insurers to provide unlimited cover for death or bodily injury from road vehicle use

Question 24

Other Policy Limits

Answer 24

sub-limits for specific types of property, like valuables, often limited to a percentage of the total sum insured

Question 25

Inner Policy Limit

Answer 25

a specific cap within sections of the policy, such as limits for valuables or specific types of coverage

Question 26

Pairs and Sets Clause

Answer 26

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

Question 27

Average Clause

Answer 27

a provision where, if underinsured, the insured is considered partly self-insured and claims are paid proportionately

Question 28

Common Limitations on Claims Settlements

Answer 28

excesses and franchises

Question 29

Excess

Answer 29

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

Question 30

Franchise

Answer 30

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

Question 31

Depreciation

Answer 31

a reduction in claims payments reflecting wear and tear on an item, paying only its current market value

Question 32

New for Old coverage

Answer 32

where insurers pay for a new replacement instead of the depreciated value, for an additional premium

Question 33

Repair/Replacement preventing fraud

Answer 33

it prevents insured individuals from inflating claims for cash profit

Question 34

Agreed Value Policies

Answer 34

policies where the value to be paid out for a total loss is pre-determined and agreed upon in advance

Question 35

Agreed Value Items

Answer 35

for hard-to-value items such as antiques, fine art or vintage vehicles

Question 36

Agreed Value Policies benefits on Claim Settlements

Answer 36

it avoids needing proof of value, deductions for depreciation or addressing underinsurance in a total loss

Question 37

Disputes on the Denial of Coverage

Answer 37

the complaint may go to the Financial Ombudsman Service or in rare cases, go to litigation

Question 38

FOS role in insurance disputes

Answer 38

it handles complaints from retail consumers and small businesses if they are unsatisfied with the insurer’s response

Question 39

Legal Framework if dispute goes to court

Answer 39

civil procedure rules, since insurance policies are contracts, and disputes are handled in civil courts