Chapter 6 Flashcards
In property insurance, what are the 3 main parts of standard fire cover?
- Fire
- Lightening
- Explosion
What are some special perils in property insurance? (Name 2)
Riot, explosion, aircraft, subterranean fire, flood, storm, escape of water, sprinkler leak, subsidence.
What does the riot compensation act now limit and what caused this shift?
The amount that can be recovered from the police.
The 2011 riots in the UK.
What are the 2 main reasons, certain types of damage might be excluded in property insurance.
The damage was caused by a fundamental risk
Because the risk should be / is better insured under an other type of insurance.
Name 2 common exclusions in property insurance.
War, radiation, terrorism (covered separately by Pool Re), NI, pollution, sonic bangs…
Who might insurers / brokers approach if an unusual peril needs covering in property insurance.
Lloyds of London.
Does ‘all risks’ mean everything is covered?
No - it covers everything not specifically excluded and accidental.
What is a gradually operating exclusion?
Damage that happens slowly over time, like rust or corrosion.
How is insurers definition of theft different to the legal definition and how does this affect cover?
Insurers include a phrase which means that theft must include force or violence. Essentially, it’s not a theft if there is not a break in.
If a theft takes things without violence, it wouldn’t be covered.
If a thief took a key by force and then entered a house using that key (so, there was no break in) would this be covered?
Yes - as the key was obtained by force
Name 2 common exclusions in theft insurance.
And what might an insurer insist on for smaller risks?
Collusion, fire, cash and livestock.
An intruder alarm warranty.
What is an EML?
Estimated maximum loss.
Thief’s won’t usually take everything so insurers usually calculate the value of the worse case scenario and insure that amount.
What would have a higher rate - general contents or target good?
Target goods.
What kind of business might want glass cover?
A high street shop.
Why would fire be excluded under glass cover?
Because this peril will be covered elsewhere. (Under a standard fire policy)
Why might a business want money covered?
Often shops have a lot cash and cheques on the premises. - it is a risk to have this so they may want to take out insurance to protect against loss of money.
What is non-negotiable money?
Money which is difficult to convert to cash value like crossed cheques.
Negotiable money would be something like bank notes.
What is an escort warranty in money insurance?
A promise to have a number of able-bodied people present when large amount of money is in transit.
What is pecuniary insurance?
It only relates to money / direct financial loss.
What is BI insurance?
It covers loss of earnings and additional expenses incurred as the result of a material loss.
What is an indemnity period in BI insurance?
The maximum period of time the income of a business could be affected as the result of damage caused by for example, a fire.
Can an indemnity period in BI cover exceed a policy period?
Yes!
How is gross profit calculated?
Gross profit (Turnover + closing stock) - (opening stock + uninsured working expenses)
Give 2 examples of an uninsured working expense
Electricity, bills, raw materials.
What is a material damage proviso?
A proviso in BI insurance which requires a property policy covering physical damage for an incident before a BI policy comes into operation.
Why do BI insurers want a material damage proviso?
Because repairs will be made quicker and the payments needed under the BI policy will be lower as result.
What is additional cost of working also known as?
Increased cost of working.
What type of company is ICOW policy designed for.
It’s designed for a company who wouldn’t experience large scale losses and would be able to get back on their feet fairly quickly.
What is the main difference between an ICOW extension and a stand-alone policy?
A stand alone policy would cover uneconomic losses. (The insured can allocate the money as they wish.)
What does a legal expenses policy cover?
Costs arising out of the need to go to court or defend actions brought against the insured.
Simply, what does a liability policies cover?
Third party injury/death/illness or property damage.
Why is negligence key to liability?
Without negligence in some respect, claims or liability would not arise.
What did the EL Act of 1969 require by law?
Every employers in UK to hold EL insurance.
What is the minimum limit for EL cover?
£5 million
Do employers have to display their EL certificates?
They used to have to. Now they don’t have to as long as an electronic copy is easily accessible to all employees.
How long do EL certs have to be kept for?
40 years.
Would an EL policy cover an employee getting hit by a hailstone on the way to work?
No because there hadn’t been negligence.
What does the removal of strict liability mean?
Negligence has to be proven when a claimant brings forth a claim.
What happens in cases where liability is not clear?
Liability usually swings in favour of the employee.
Would a work experience student be covered under an EL policy?
Yes.
Can EL cover diseases found years after the policy has expired?
Yes - hence asbestos claims.
What does PL cover?
Liability to TP against injury, death, illness or property damage.
Give an example of a consequential loss.
Paying for a hire car for the TP.
Name 2 common exclusions under a PL policy.
Injury to employees, product liability, defective workmanship, deliberate acts, war risks, radioactive risks.
What does product liability insurance cover?
Bodily injury or property damage which arises out of goods produced, repaired or manufactured.
Is pollution insurance usually any one claim or in aggregate.
In the aggregate.
What does PI insurance cover?
An injury, damage or loss as the result of breach of professional duty. E.g., giving the wrong advice.
What does a claims made basis mean and what type of insurance is it common in?
Claims are covered during the period of insurance rather than when the loss occurred. PI
What is a retroactive date?
The first date from which you have held uninterrupted insurance.
Can you move insurer and still have «uninterrupted cover «
Yes- cover doesn’t have to be with the same insurer.
What does D&O insurance cover?
Personal liability for directors and offers for financial loss suffered by TP’s.
What is an E&O policy and who is it for?
It is for errors and omissions Eg., when the policy doesn’t do what the broker says it would do.
Brokers or intermediaries are required to have this insurance.
How are limits set in E&O policies?
The size of broker.
What does medical malpractice insurance cover and who is it for?
When medical professionals failed to use reasonable care e.g., a patient didn’t recover as quickly as they expected. It’s for doctors and NHS trusts.
What 3 main things does cyber insurance cover?
Damage to physical property, pecuniary loss following interruption, loss of TP data.
What does 1st party and 3rd party losses relate to in cyber insurance?
1st party relates to losses the insured directly experienced. 3rd party relates to the duty of care to third parties and their data/property.
Does Pool RE include cyber?
It does now to a limited degree.
