Chapter 7 - Policy Wording Flashcards
When does an insurance contract come into effect?
Once the proposer has paid, or agreed to pay, the premium
FCA rules require that for commercial customers, a policy document must be issued when?
Promptly after the conclusion of the contract
Who has produced a code of good practice (Principles and Guidance – Contract Certainty) which includes service standards for issuing insurance documents within good time?
The Association of British insurers ABI
The ABI states that for commercial customers, “promptly” means what?
Within 30 calendar days of the inception date of the contract.
Is the ABI code compulsory?
No - but all ABI members have agreed to abide by it.
What is included in a policy wording heading?
The name of the insured
Address
Company logo
What is a Recital Clause?
Sets the scene for what follows in the policy.
Refers to the two parties coming together to form a contract
Insured has agreed to pay XX if the insurer takes on the risk detailed in the policy.
What is meant by signature?
A pre-printed signature of an official from the insurer is usually required but not a strict necessity.
What is the Operative clauses?
Specifying in detail what is covered.
What conditions do not need to appear in the policy to apply?
Ones implied by common law
What is an express condition?
A condition stated in the policy wording and not specific to a policy.
If a condition is specific to a policy, where would it be found?
In the operative clauses.
If the cover required and agreed is wider than the operative clause, where would you find it?
In an extension.
What is found under the information and facilities section?
Definitions
customer service standard statement
complaints procedure
claims information
What is the main non pre-printed or standardized document?
Policy Schedule
What are the three types of exclusion?
Specific
General
Market
Where do specific, general and market exclusions apply?
Specific - to parts of the policy
General - all sections of the policy
Market - all insurance policies
Why is war and related perils normally excluded
It is fundamental (applies to the community at large) so uninsurable
Its the states responsibility.
What are the main common exclusions?
War
Radioactive/nuclear
Electronic/cyber
Pollution
Sonic bangs
What does the condition “alteration” mean?
Extends the duty of disclosure.
The policyholder must instruct there insurer of any changes which may change the risk.
What does the subrogation condition mean?
The insurer can take over the insureds rights when there is a claim to recover the loss from the TP.
What does the arbitration condition mean?
This states that any disputes regarding the amount to be paid in settlement of a claim will be judged by an independent arbitrator. Arbitration is binding on all parties.
What is a warranty?
A promise by the policy holder that something will be done, not done, that something is true or not true.
For example: promise to not have any flammable liquids, promise to take the rubbish out every day, the warehouse does have an alarm, there is no welding on the premises.
How strict are warranties?
Very - they must be strictly and literally complied with for cover to be valid.
If you breach a warranty however that breach does not cause the claim - are you covered?
Yes
Under the IA 2015, what does a breach of waranty cause?
Temporarily suspends the insurers liability until the warranty is complied with.
An insurer cant refuse to pay a claim unless the breach has cause or contributed to the claim.
What does conditions precedent mean?
Conditions that must be done prior to binding.
What would make a policy void?
An illegal contract
No insurable interest
A fundamental Mistake
What type of breach will render a policy void ab initio or entitle the insurer to avoid the policy at its option?
A breach of a condition precedent to the contract can either render a policy void ab initio, or make it void at the insurer’s discretion (depending on the nature of the breach).
What type of breach allows the insurer to avoid the policy from the date of the breach, provided there is a causal connection between the breach and the incident giving rise to its loss?
A breach of continuing condition permits the insurer to avoid the policy from the date of the breach, but only if there is a causal connection between the breach and the loss.
What type of breach allows the insurer to avoid a particular claim, but not the policy as a whole?
A breach of a condition precedent to liability allows the insurer to avoid the claim concerned, but not to avoid the whole policy.
If a proposer provides wrong information, even innocently, what is this called?
Misrepresentation
If a misrepresentation relates to a material circumstance what does the insure have a right to do?
Avoid the policy - ab initio - from the beginning
When must a certificate be issued?
When insurance is compulsory by law
