Claims settlement Flashcards
In what 4 circumstances might an insurer refuse to pay a claim?
- Cover was never in force
- Breach of a relevant warranty
- Breach of a policy condition
- Fraud
What are partially met claims?
Where a claim is valid but some terms and conditions mean that the full value claim settlement is not made.
How would you calculate a claim under the pro rata average condition?
Sum insured / value of property at risk x loss
What is a deductible and why is it used?
A deductible is a large excess.
An insured (usually a large commercial concern) may wish to limit its cover to large claims and be its own insurer for smaller claims.
What is a franchise?
An excess where claims are paid in full once the claim exceeds a specific threshold.
How are claims settlements made?
- Payment of money [liability, personal accident and pecuniary insurance (e.g. business interruption) claims].
- Paying repairs (Motor Insurance claims)
- Replacement (Glass Insurance claims, some home contents claims)
- Reinstatement (sometimes property)
In what situations might ex-gratia payments be made?
- where an exclusion is a borderline one
- where there is a genuine oversight by the insured (such as an administrative error)
- where hardship would be created
- to preserve good business relationships.
What are the key features of the ABI Memorandum of Understanding - Subrogated Motor Claims?
- consistency in authorising repair costs, regardless of whether recovery is likely
- claims must represent the net costs to the insurer
- supporting documentation should be volunteered
- legal costs should be avoided, with proper notice being given of any intended proceedings.
What is RIPE (Reduction in Paper Exchange)?
An agreement in respect of motor vehicle damage claims where repair documentation does not need to be provided, with each insurer trusting the other.
What is the purpose of the ABI Personal Effects Contribution Agreement?
- avoid adverse publicity for insurers
- avoid costly and unnecessary handling of small contribution payments
- set rules for contribution between participating insurers
Deals with Claims for the loss of personal effects covered by two or more policies. (Applies regardless of any policy provisions)
What does the ABI Personal Effects Agreement cover?
- Motor accidents/thefts
- Specified items
- All other circumstances (amount over £125 and the other policy is not a motor policy)
- No claims discount
What does MIB stand for and what is its purpose?
Motor Insurers Bureau (Established 1946)
Administer a central compensation fund for innocent parties unable to recover compensation following a road accident.
