Chapter 6 Flashcards
Why is effective communication between underwriting and claims departments essential?
A) To increase premiums for high-risk clients
B) To ensure policy interpretation is consistent and trends are identified
C) To prioritise settlements over fraud detection
D) To allow claims handlers to make underwriting decisions
B
Which of the following is NOT a key area of liaison between underwriting and claims teams?
A) Emerging risk trends
B) Claims reserving changes
C) Policyholder personal opinions
D) Policy wording updates
C
How does VAT affect commercial vehicle insurance claims?
A) Insurers always reimburse VAT to policyholders
B) If the insured can recover VAT, the insurer will deduct it from the final repair settlement
C) VAT is never included in claim settlements
D) Policyholders must pay VAT directly to repairers
B
A company can reclaim VAT on repair costs. How does this impact the insurer’s payout?
A) The insurer pays the full amount including VAT
B) The insurer deducts VAT before settling the claim
C) The claim is denied
D) The insurer reimburses VAT only for third-party claims
B
Trade Plates and Motor Trade Insurance
What is the purpose of trade plates?
A) To allow vehicles to be driven without registration for business use
B) To exempt drivers from road traffic laws
C) To reduce insurance premiums for commercial vehicles
D) To allow unrestricted personal use of vehicles
A
Which of the following is TRUE about trade plate usage?
A) They can be used for social and domestic purposes
B) They are issued by insurers to high-risk drivers
C) They are only valid for UK business-related vehicle movements
D) They can be transferred between private vehicles
C
What makes petrol tankers a high-risk commercial vehicle for insurers?
A) High fuel costs
B) Their increased likelihood of catastrophic damage in an accident
C) Their frequent use in urban areas
D) Their lack of safety features
B
Why might an underwriter exclude coverage for a fleet of coaches stored in one location?
A) Increased risk of total loss due to fire or theft
B) High passenger capacity
C) Excessive annual mileage
D) Lack of experienced drivers
A
Under what circumstance would a motor trade road risks policy be rated on a named driver basis?
A) When the policyholder has multiple vehicles
B) When the business has fewer than a certain number of drivers
C) When the policy covers all employees
D) When the insurer wishes to avoid policy limits
B
How does a “points basis” rating system work for motor trade risks?
A) Premiums are calculated based on the age of the vehicles
B) Insurers assign points for driver age, experience, and claims history
C) It applies only to high-performance vehicles
D) The policyholder selects a fixed number of drivers
B
What is the primary factor in calculating premiums for a motor fleet policy?
A) The individual driver’s experience
B) The fleet’s claims history and risk profile
C) The engine size of the vehicles
D) The market value of the vehicles
B
A fleet underwriter is assessing a business with five cars and three vans. What approach will they likely use?
A) A case-by-case assessment of each vehicle
B) A single premium based on past fleet performance and claims history
C) Individual driver-based pricing
D) A fixed industry standard rate
B
What key information is found on a motor fleet experience form?
A) The company’s financial statements
B) Claims history, number of vehicles, and type of cover
C) A list of driver training courses attended
D) The vehicle manufacturer’s specifications
B
Which of the following is NOT a requirement for insuring an agricultural or forestry vehicle?
A) It must be primarily used for agricultural purposes
B) It must comply with Road Traffic Act 1988 regulations when used on public roads
C) It must be registered as a commercial vehicle
D) It must not be used for hire and reward
C
What is a key underwriting concern for private hire and public hire vehicles?
A) The risk of fare disputes
B) The increased exposure to frequent passenger claims
C) The cost of luxury vehicle maintenance
D) The requirement for daily mileage reporting
B
What is the main difference between private hire and public hire vehicles?
A) Private hire vehicles can be hailed on the street, whereas public hire vehicles cannot
B) Public hire vehicles require pre-booking, while private hire vehicles do not
C) Public hire vehicles can be flagged down on the street, whereas private hire vehicles require advance booking
D) Private hire vehicles have lower insurance premiums
C
Which reinsurance method is most commonly used in commercial motor underwriting?
A) Stop-loss reinsurance
B) Excess of loss reinsurance
C) Facultative reinsurance
D) Quota share reinsurance
B
Why might an insurer limit cover for a vehicle used for occasional business use?
A) To reduce claims involving unreported business mileage
B) To avoid covering personal use of vehicles
C) To encourage policyholders to use public transport
D) To prevent excessive maintenance costs
A
What is the primary concern when underwriting electric commercial vehicles?
A) The high cost of battery replacement
B) The risk of driver error
C) The lack of roadworthiness testing
D) The difficulty in obtaining insurance
A
What factor is most important when considering contingency liability for fleet insurance?
A) Whether the vehicles are used for international transport
B) Whether the company has appropriate employer’s liability cover
C) Whether the company employs freelance drivers
D) Whether the company owns or leases its vehicles
C
