Chapter 7 Flashcards
A liability policy provides indemnity to the:
insured in respect of their legal liability to pay damages and claimant’s costs.
The stock in Beryl’s toy shop, which cost £190,000 to buy, is destroyed in a fire. Had she sold this stock, Beryl would have made a profit of £10,000. She contacts her supplier and is told that the total cost of replacing the stock is £200,000. It will cost an extra £500 to deliver this to her shop. How much will Beryl’s property damage insurer pay in settlement of her claim for the loss of stock?
£200,500.
What is meant by the term betterment?
The allowance made by insurers for improvements made to an insured property during repairs.
What type of policy is a personal accident and sickness policy?
A benefit policy.
The looms at Jim’s textile factory are insured on an indemnity basis. A fire breaks out at the factory, destroying one of the looms. The looms originally cost £1,000 each, but would now cost £2,000 to replace. An equivalent second hand loom could be purchased for £1,200 plus £100 carriage and installation costs. How much will his insurer pay in settlement?
£1,300.
what types of policy is most likely to be arranged on a first loss basis?
Theft
If a piece of equipment is insured on an indemnity basis, the measure of indemnity is the value of the property at the date and place:
when the loss occurs.
Which of the following is a benefit of using the replacement option as a method of settling commercial glass insurance claims?
Further losses are minimised.
Which of the following is most likely to be insured under an agreed value policy?
A work of art.
The settling of which of the following types of insurance claim will always involve the payment of money?
Business interruption.
If a piece of equipment is insured on an indemnity basis, the measure of indemnity is the value of the property at the date and place:
when the loss occurs.
The machinery in Rasheda’s factory is insured on an indemnity basis. A piece of machinery is partially damaged in a fire and Rasheda makes a claim under her property damage policy. The measure of indemnity used by her insurer to settle the claim will be the:
repair cost less an allowance for wear and tear.
The measure of indemnity under a marine policy which has been arranged on a valued basis is determined by the:
value agreed between the insured and the insurer.
