Claims requirements, duties and principles Flashcards
What must an insured prove to make a valid claim?
- that an insured peril arose - i.e. that they have suffered a loss directly caused by a peril which is covered under the policy. Proof can be in the form of a completed claim form, or frequently is via telephone notification
- the amount of their financial loss - supporting evidence in the form of a receipt, a repair bill or a valuation must be produced.
What are an insurers responsibilities in the claims process?
verifying that:
- cover was in force at the time of the loss
- the insured is that named in the policy
- the peril is covered by the policy
- the insured has taken reasonable steps to minimise the loss
- all conditions and warranties have been complied with
- the principle of utmost good faith was originally complied with
- no exceptions are appropriate
- the value of the loss is reasonable.
A claim may prove to be invalid if these conditions are not met (or the insurer can prove fraud).
What would happen if a condition precedent to liability (or recovery) is not observed?
Insurers may avoid liability for a particular loss, but they need not repudiate the contract as a whole.
If, at a later date a valid claim is made, the insurers must pay, provided that the insured complies with the condition in that instance.
HOWEVER, the insurer should not refuse to pay a claim from a consumer on the grounds that a condition was not met, where that condition was not connected with the circumstances of the loss.
In what situations will full indemnity not be provided to the insured?
- the sum insured (or limit of indemnity in the case of liability insurance) is less than the value of the claim - the insurer’s liability is restricted to the sum insured
- the average clause operates - where the policyholder has under-insured their property
- an excess applies - the insured is responsible for the first amount of a claim.
What is the main form of documentary evidence used to support a claim?
The Claim form
What are the 5 main functions of a claims form?
- establish if the insured is entitled to indemnity under the policy - by checking that the loss or damage is covered and that there has been no non-disclosure or misrepresentation
- obtain sufficient information to begin processing the claim
- assess the severity and potential cost of the claim
- take a preliminary view on whether any third party claims are likely to be reported
- decide whether or not there is any possibility of recovery rights against a third party.
What type of insurance must a claim form always be completed following a risk event, regardless of whether the insured intends to claim or not?
Motor insurance.
The claim form is known as an ‘accident report form’.
This is because it is a policy condition in motor insurance that all accidents are reported to the insurer, regardless of whether a claim will be made.
What information is required within a motor insurance accident report form?
- details of the insured
- the date and time of the accident, the presence of street lighting and car lights
- the vehicle involved in the accident, and its use
- particulars of the driver at the time of the accident, if not the insured
- details of the accident, including a sketch plan of the scene
- particulars of other parties involved and property damaged or injuries sustained
- particulars of any independent witnesses.
What information is required within a property insurance claim form?
- description of the property damaged, e.g. stocks, fixtures and fittings, carpets
- date, cause, circumstances and the monetary amount of the loss or damage
- situation and occupancy of the premises
- capacity in which the insured is claiming (e.g. as owner, custodian etc.)
- whether any other person has an interest in the lost or damaged property
- whether or not there is any other insurance in force.
What evidence in addition to a claims form is needed for theft claims?
The details on the claim form can often be compared with what’s listed in the police report.
What evidence in addition to a claims form is needed for accident claims?
Engineers’ reports, photographs or scale plans may be obtained as necessary and accident books looked at.
What evidence in addition to a claims form is needed for personal injury and sickness claims?
Medical evidence and/or doctor’s certificates, death certificates and coroner’s inquest judgments will be examined, as applicable.
What evidence in addition to a claims form is needed for motor claims?
Vehicle registration documents in respect of total loss motor claims or vehicle theft would be appropriate.
Who else might be involved in the investigation process of a claim?
Different types of experts.
The experts used in the investigation process might be, for example:
- solicitors: to give legal opinions, or to commence or defend legal proceedings
- surveyors: to estimate rebuilding costs
- doctors: to verify or assess the severity of injuries.
What is proximate cause?
“The active, efficient cause that sets in motion a train of events which brings about a result, without the intervention of any force started and working actively from a new and independent source.”
