Commercial, Pecuniary, BI, Liability

Question 1

Fire insurance developed alongside the need for businesses to insure their assets.

Answer 1

True

Question 2

Initially the need for insurance was seen as very straightforward, to insure property against damage or destruction by fire.

Answer 2

True

Fire insurance

Question 3

The insurance market sees the ‘Standard Fire Policy’ (the ABI recommended wording) as the basis for its wordings.

Answer 3

True

ABI recommended wording

Question 4

Although individual insurers have since issued their own plain English versions which provide standard fire cover, and then ‘extra’ perils (known as special perils or in some insurers’ policies as specified contingencies) can be added.

Answer 4

True

Question 5

It is now common to issue policies covering fire and special perils as standard.

Answer 5

True

ABI recommended wording

Question 6

So what is ‘standard’ fire cover ?

Answer 6

Standard fire cover is made up of three parts:
Fire (excluding explosion resulting from fire, earthquake or subterranean fire, and its own spontaneous fermentation or heating);

lightning; and

explosion (restricted to explosion of boilers or gas used for domestic purposes only

Question 7

‘Domestic’ can still apply to industrial and commercial premises, as it relates to the use of the boiler.

Answer 7

True

Question 8

For example, heating the property or where gas is used in a canteen.

Answer 8

True

‘standard’ fire cover

Question 9

The special perils that may be included are as follows, each is preceded by ‘damage caused to the property by’ and can be added individually or in combinations.

Answer 9

True

Question 10

Cyber risks

Answer 10

which exclude damage resulting from risks such as computer viruses etc.

Question 11

Exclusions apply where damage is caused by

Answer 11

in Explosion:
(bursting of a boiler or other equipment that belongs to or is under the control of the policyholder where the internal pressure is due to steam only (these are items insurable under an engineering explosion policy).

Question 12

Aircraft (excluding sonic bang), i.e. an aircraft or aircraft parts falling through the roof of a building.

Answer 12

Covered peril under ‘special perils’

Question 13

Covered peril under ‘special perils’:
Riot and civil commotion,
(The Public Order Act 1986)

Answer 13

Public Order Act 1986 defines a riot as a group of twelve or more people, gathered for and carrying out a common purpose with intent, and force if necessary, and in such a way as to alarm a person of reasonable firmness and courage.

Question 14

This will only USUALLY cover riots in England, Scotland and Wales, as the Government has a separate scheme in place for Northern Ireland.

Answer 14

Covered peril under ‘special perils’
Riot and civil commotion,
(The Public Order Act 1986)

Question 15

Insurers apply a condition that riot claims are notified to insurers within an agreed period, NORMALLY

Answer 15

Seven days.

Question 16

This is because insurers can claim damages from the local police authority for damage incurred as a result of riot activity, and this needs to be lodged with the police within

Answer 16

42 days.

Question 17

Following the riots in the UK in August 2011,
the Riot Compensation Act 2016 (which replaces the Riot Damages Act 1886 and the Riot Compensation Regulations 2017 which both came into force on 6 April 2017.

Answer 17

The Riot Compensation Act 2016 limits to what can be recovered from the police.

Question 18

The Act: applies a limit?

Answer 18

£1 million limit for any one claim;

Question 19

It will not apply to any consequential loss;

Answer 19

True

The Riot Compensation Act 2016

Question 20

Confirms the time period for bringing a claim against the police as?

Answer 20

42 days.

Question 21

Allows a further 90 days to submit full claims details;

Answer 21

True

The Riot Compensation Act 2016

Question 22

Permits replacement goods and property (with some exclusions) on :

Answer 22

A new-for-old basis.

Question 23

Most insurance policies do not limit what is covered in respect of riot or civil commotion, either under the material damage or business interruption sections.

Answer 23

True

Question 24

Most insurance policies provide cover up to the sum insured, set by the insured, subject to compliance with policy terms, conditions and exclusions ,

Answer 24

(e.g. notification within a specified timescale).

Question 25

Recovery by insurers and uninsured claimants from the police is what is limited under the Act and Regulations.

Answer 25

True

Question 26

Malicious damage, i.e.

Answer 26

Vandalism.

Question 27

Earthquake:

Answer 27

In some countries ‘earthquake‘ is classed as a fundamental risk due to the frequency and severity of earthquake incidents.

Question 28

UK insurers are prepared to accept the risk of earthquake damage due to ?

Answer 28

The minimal earthquake activity in this country.

Question 29

This is still the case despite several larger, albeit localised, earthquakes over the last few years, as the damage has been manageable and not excessive.

Answer 29

True

Question 30

Spontaneous fermentation or heating or Subterranean fire – otherwise known as underground fire.

Answer 30

Particularly important if you live in an area with former mining activity.

Question 31

Storm and flood. These two perils are USUALLY written together as quite OFTEN….

Answer 31

Storm is the proximate cause of flood.

Question 32

An insurer is UNLIKELY to offer flood in isolation and terms are applied to both perils to avoid ambiguity in respect of claims settlement.

Answer 32

True

Question 33

Property which is vulnerable to such losses is USUALLY excluded,

Answer 33

e.g. gates and fences, as are changes in the water table level.

Question 34

Escape of water commonly referred to as

Answer 34

‘Burst pipes’ cover

Covered in The Riot Compensation Act 2016

Question 35

Some package policies may ALSO make reference to escape of heating oil.

Answer 35

True

Question 36

Impact (including own vehicles).

Answer 36

(Covered in The Riot Compensation Act 2016)

Question 37

Sprinkler leakage – offered to companies with sprinkler fire protection in their premises provided the systems are maintained.

Answer 37

(Covered in The Riot Compensation Act 2016)

Question 38

Subsidence, ground heave and landslip (with special exclusions).

Answer 38

(Covered in The Riot Compensation Act 2016)

Question 39

Certain geographical locations in the UK are prone to subsidence-related damage due to the soil type in the area. Clay soils are also of particular concern, as is surrounding vegetation, and insurers will ALSO be interested in local mining activity, both past and present. Although excluded under some insurers’ definitions of ‘special perils’, sinkholes may ALSO be covered under some policies, as they are NORMALLY found under personal lines household policies.

Answer 39

True

Question 40

In fact, some insurers will pay for costs where there is no damage to property (yet), to avoid possible future damage if something like a sinkhole is left untouched.

Answer 40

TRUE

Question 41

( The Riot Compensation Act 2016)
Standard exclusions :
Certain causes of damage are excluded.
Some of these are because they are regarded as fundamental risks…

Answer 41

(War, Riot, Radiation, Pollution), and others because they are more properly insured under other types of commercial insurance policy (marine, consequential losses).

Question 42

Directors are to:

Answer 42

• Act within the company’s constitution and properly exercise powers.
• Avoid conflicts of interest. (Directors must authorise any individual director’s conflict of interests. They may do so provided there is no conflict with the constitution of the company).
• Declare an interest in any proposed transaction with the company. This must include the nature and extent of that interest.
• Exercise independent judgment.
• Exercise reasonable care, skill and diligence.
• Not accept benefits from third parties, unless this is unlikely to give rise to a conflict of interests.
• Promote the success of the company for the benefit of its members.

Question 43

Some insurers do not exclude religious and ideological acts by deliberately omitting them from the terrorism definition;

Answer 43

True

Question 44

These are USUALLY insurers offering capacity within the Lloyd’s Market, which is NOT backed by Pool Re, and OFTEN carries individual location and policy annual aggregate limits.

Answer 44

True

Question 45

Most insurers’ policies will respond to ‘gap cover’;

Answer 45

Most insurers’ policies will respond to ‘gap cover’;

Question 46

What is gap cover?

Answer 46

Where a ‘terrorist-type’ incident occurs, but does NOT meet the definitions of terrorism under an insurer’s policy. (This is sometimes referred to as ‘lone wolf’ cover.)

Question 47

Most insurers’ policies will respond to ‘gap cover’;

Answer 47

True

Question 48

Northern Ireland excluded perils.

Answer 48

Excluded mainly

Question 49

Pollution or contamination unless caused by an insured peril or it causes an insured peril to occur.

Answer 49

Excluded mainly

Question 50

Marine policies.

Answer 50

Excluded mainly

Question 51

‘More specifically insured’ clauses.

For example, a motor vehicle left in a building overnight that is lost to fire would USUALLY be covered in its own right under a private car motor policy.

Answer 51

Excluded mainly

Question 52

‘Consequential loss’ exclusion.

For example, loss of profits or income following and consequent upon a loss proximately caused by an insured peril.

Answer 52

Excluded mainly

Question 53

Sonic bangs.

Answer 53

Excluded mainly

Question 54

Cyber risks

Answer 54

Which exclude damage resulting from risks such as computer viruses etc.

Question 55

Although we have said that these insured and excluded perils are GENERALLY standard, you should be aware that ::

Answer 55

The exact wording does differ slightly between the general company market and the Lloyd’s Market.

Question 56

‘All risks’ insurance ?

Answer 56

Demand arose for a policy which offered cover for accidental damage as well as the standard perils.

Question 57

All risks insurance developed in response to this, although the name ‘all risks’ is slightly misleading as it does not cover everything, it simply covers :

Answer 57

Everything that is not specifically excluded.

Question 58

It was realised GENERALLY that uncertainty of loss is NOT restricted to events brought about by fire and special perils, neither limited to events occurring on or about the insured’s premises.

Answer 58

True

Question 59

The ABI has a recommended wording adding special perils to a basic fire policy and then adding the ‘all risks’ element, with its exclusions.

Answer 59

True

Question 60

Therefore, some exclusions can be restricted to only the extra ‘accidental damage’ cover, leaving the named perils intact.

Answer 60

True

Question 61

In essence, all loss, destruction of or damage to the property insured is recoverable as long as it has occurred accidentally in respect of the insured, and the cause is not specifically excluded.

There are no optional extensions: everything is covered, unless specifically excluded.

Answer 61

True

Question 62

Exclusions can be divided into four groups:

Answer 62

Absolute exclusions

Gradually operating exclusions

Aspects of cover which can be written into the policy

Property or risks more appropriate to another class of business

Question 63

Absolute exclusions

Answer 63

war, pollution, contamination, consequential loss.

Question 64

Gradually operating exclusions

Answer 64

corrosion/rust, wind/rain damage to property in the open.

Question 65

Aspects of cover which can be written into the policy

Answer 65

money, glass, subsidence.

Question 66

Property or risks more appropriate to another class of business

Answer 66

motor vehicles, aircraft.

Question 67

Theft cover is USUALLY priced using the theft estimated maximum loss (EML) as a rating factor, as more OFTEN than not a 100% loss is not expected.

Answer 67

True

Theft cover

Question 68

An EML is the amount (OFTEN expressed as a percentage of the sum insured) which is considered by the insurer to be an accurate reflection of the worst financial effect that the maximum foreseeable loss would have.

Answer 68

True

Theft insurance use rating factor of EML

Question 69

This is the sort of assumption you could make about a ‘targeted’ theft;
What is the other factor?

Answer 69

An ‘opportunist’ theft which is the lack of preparation and corresponding lack of time to coordinate what is and is not taken.

Question 70

In both examples, it is unlikely that ALL goods will be stolen.

Answer 70

TRUE

Theft cover

Question 71

Who GENERALLY applies different levels of rating for the type of goods at risk?

Answer 71

Underwriters.

Question 72

For instance, thieves are fairly unlikely to steal office desks, paper, cleaning equipment and other general contents, especially if theft attractive ‘target’ items such as office electrical equipment, computer equipment, wines, spirits, electrical stock, jewellery etc. are present.

Answer 72

TRUE

Theft insurance

Question 73

Underwriters would therefore tend to cover general contents at a reduced rate in comparison to ‘target’ goods.

Answer 73

TRUE

Theft insurance

Question 74

Glass would USUALLY be insured against damage caused by a fire or theft if a fire or theft policy were in place.

However, some common causes of damage to glass (accidental damage) are excluded from these standard covers, so a business with large amounts of glass will OFTEN want cover for this.

Answer 74

True

Glass Insurance

Question 75

An example would be a high street shop as large plate glass windows can be extremely expensive.

Answer 75

True

Glass Insurance

Question 76

What does the standard policy of glass insurance cover?

Answer 76

Destruction or damage to all fixed glass, including windows, doors, fanlights, showcases, mirrored glass and glazed partitions, and USUALLY includes an extension to provide for the cost of boarding up damaged glass until replacement can be effected.

Question 77

If damage happens overnight the costs of this can be quite high.

Answer 77

True

Glass Insurance

Question 78

OFTEN the police will call a 24-hour glazier to board up windows to prevent further loss or damage.

Answer 78

True

Glass Insurance

Question 79

Cover is ‘all risks’ but scratching or chipping is USUALLY excluded.

Answer 79

True

Glass Insurance exclusion

Question 80

It may be extended, for ADDITIONAL PREMIUM, to include damage to storefront contents because of ??

Answer 80

Broken glazing, and damage to washbasins and sanitary fittings in hairdressing salons.

Question 81

Damage by fire, lightning and explosion is GENERALLY excluded (these perils are covered under a standard fire policy).

Answer 81

True

Glass Insurance exclusion

Question 82

An excess, e.g. £50, is standard to avoid the small claims, although most insurers are now moving towards an excess of £250.

Answer 82

True

Glass Insurance excess

Question 83

Money insurance:
Think about how many businesses operate, especially retail shops.

They sell goods for cash and OFTEN have large amounts of cash and cheques on the premises.
Clearly there is a risk to this money, both while on the premises, and while in transit.
As a result, many businesses will want to take out special insurance to protect against loss of money.

Answer 83

True

Money Insurance

Question 84

Insurers in their policy wording will refer to the negotiability of money, i.e. the ease with which it can be converted to cash.

Answer 84

True

Money Insurance

Question 85

Money, which is non-negotiable,
is difficult to convert into a cash value and, therefore, insurers offer cover at a relatively high limit,
e.g. crossed cheques.
Limits of ??

Answer 85

£250,000 or even £500,000 are not uncommon.

Question 86

Negotiable items are??

Answer 86

Readily convertible to their cash value, e.g. bank or currency notes.

Question 87

For these items the limits of liability are more modest and will depend upon locality and time,
e.g. ‘in safe’, ‘out of safe on the premises’, ‘in transit’ and ‘during or out of business hours’.

Answer 87

True

Money Insurance

Question 88

In respect of negotiable items the following limits will be specified in the policy schedule:

Answer 88

Any other money limit.

Money in safe.

In the insured’s premises out of working hours

The private residence of a director or employee.

Question 89

The limit to money while in the premises when open for business and while in transit.

In respect of money in transit insurers may stipulate an escort warranty where, depending upon the amount of money being carried, a specified number of able-bodied people may need to be present.

Limits rarely exceed £10,000 and could be as low as £1,000 for smaller risks.

Answer 89

Any other money limit.

Question 90

Insurers will OFTEN require a security safe to be installed if the ‘money’ at risk exceeds certain limits.

Safes are manufactured and tested to achieve a cash rating, i.e. an amount for which the safe is suitable to secure, this can range from £1,000 to £100,000 plus.

Answer 90

Money in safe.

Question 91

It is OFTEN the job of the risk surveyor to determine whether a safe is required or assess whether an existing safe is suitable.

Answer 91

Money in safe.

Question 92

In the insured’s premises out of working hours?

Answer 92

Up to, say, £250.

Question 93

The private residence of a director or employee?

Answer 93

Nominal – up to £250.

Question 94

What does the Money policy cover?

Answer 94

A policy covers risks of loss or damage to or destruction of money on an all risks basis, and includes damage to safes or strong rooms caused by theft or attempted theft.

Question 95

Money policy can be extended to include:

Answer 95

personal accident/assault; and credit cards (which are not covered by a standard money policy).

Question 96

The principal specific exclusions are as follows.

Answer 96

a safe/strong room being opened by a key left on the premises while closed for business.

Loss due to: error or omissions in accounting and book-keeping;

damage arising outside the UK, Isle of Man or the Channel Islands;

dishonesty of an employee,

not discovered within seven days;

Question 97

Pecuniary Insurance?

Answer 97

A direct financial loss.

Question 98

Policies are based on a sum insured representing the gross profit for the indemnity period
chosen.

Answer 98

Business Interruption

Question 99

Gross profit is calculated as follows:

Answer 99

Turnover (with adjustment for opening stock and closing stock) less uninsured working expenses.

Question 100

Gross profit = (Turnover + Closing stock) – (Opening stock + Uninsured working

Answer 100

Gross profit calculation in Business Interruption Insurance

Question 101

Uninsured working expenses are those costs which vary in direct proportion to the

Answer 101

Level of turnover.

Question 102

These would include :

Answer 102

Electricity, raw materials and such like.

Question 103

The payroll element is USUALLY insured in full, although a lower rate may be applied to this element.

Answer 103

True

Business Interruption

Question 104

The main items insured under a business interruption policy are:

Answer 104

• loss of gross profit;

* increased cost of working (ICOW).

Question 105

Incurred in order to reduce the loss of gross profit following the insured event.

Answer 105

Increased cost of working (ICOW).

Question 106

Such costs should be ‘economic’ and be less than the amount of the gross profit saved.

Answer 106

Increased cost of working (ICOW).

Question 107

From these will be deducted savings made during the indemnity period.

Answer 107

True
(• loss of gross profit;
• increased cost of working (ICOW). )

Question 108

There will USUALLY be a material damage proviso, requiring a property policy covering the physical damage for the incident, before the business interruption policy comes into operation.

Answer 108

True

Business Interruption

Question 109

In practice, the two policies will USUALLY be linked.

Answer 109

True

Business Interruption and Material damage provisio

Question 110

Unless there is an insurance policy in force covering damage to the property there is a good possibility that this damage will not be repaired quickly and the interruption to the business will be so longer…

Answer 110

Any claim under the BI policy would be likely to be much higher…

Question 111

The most common policies are business interruption arising from:

Answer 111

Fire and special perils
All risks’
Engineering

Question 112

Fire and special perils:

Answer 112

the standard perils are extended to include non-domestic boilers.

The special perils ALSO contains six engineering special perils not covered by the material damage policy (although the material risk will need to be covered by an engineering policy because of the material damage warranty).

Question 113

‘All risks

Answer 113

insurers OFTEN issue a combined material damage and business interruption policy.
As in property insurance this is not all risks, it covers any risk that is not specifically excluded.

Question 114

Engineering

Answer 114

the perils covered are USUALLY either:
– failure of the public utilities supply; or
– sudden and unforeseen damage from any accidental cause not specifically excluded.

Question 115

Optional extensions
There are certain optional extensions.
The cover will be the same, or sometimes a lesser range of perils, as at the insured premises. For example:

Answer 115

Specified suppliers. 
Unspecified suppliers
Specified customers. 
Transit
Prevention of access.
Public utilities
Notifiable disease/murder/suicide.

Question 116

Specified suppliers

Answer 116

Provides an indemnity to the insured if the supplier suffers a serious loss and cannot supply the insured’s goods.

Question 117

Unspecified suppliers

Answer 117

As above, however included under most business interruption wordings and providing a pre-set limit, i.e. 10% of the gross profit sum insured, for loss of profit as a result of a loss at a supplier’s premises which has a subsequent negative effect on the insured’s profits.

Question 118

Specified customers.

Answer 118

Similar to above except the loss has to occur at a customer’s premises, preventing them purchasing the insured’s goods.

Question 119

Prevention of access.

Answer 119

Customers being unable to access the insured’s premises following damage to premises within the vicinity of their own could lead to loss of profits.

Question 120

Public utilities

Answer 120

Failure of gas, electricity or water to the insured’s premises thereby affecting production and subsequent profit.

Question 121

Notifiable disease/murder/suicide.

Answer 121

This extension provides for loss following the occurrence of one of these events and thereby prevents the insured from conducting their business activities at their premises.

Question 122

Clearly, the insured will be unable to produce the finished item if the raw material is unavailable, and this can expose the insurer to potentially heavy losses especially when the item supplied is specialist in its nature with no readily available alternative market.

Answer 122

Specified suppliers

Question 123

Insurers OFTEN require surveys of the supplier’s premises if the exposure is particularly large.

Answer 123

Specified suppliers

Question 124

This can cause problems if the supplier is located in a foreign country.

Answer 124

Specified suppliers

Question 125

Increasingly insurers are being asked to include cover for other diseases which have become more high-profile (e.g. norovirus, ebola), even though some (e.g. norovirus) are not notifiable to local authorities.

Answer 125

Notifiable disease/murder/suicide.

Question 126

Contract sites

Answer 126

An insured may incur a loss if there is damage on a contract site where they are working.

Question 127

Some companies would not necessarily experience large scale, if any, loss of profits if they suffered a serious fire or other loss at their premises.

Answer 127

ICOW or ACOW

Increased cost of working or additional cost of working.

Question 128

ICOW has been designed to provide

Answer 128

that type of company with an amount of money to spend getting back on its feet as quickly as possible.

Question 129

So how would the loss adjuster tackle the task?

Answer 129

First, the company would need alternative accommodation which the loss adjuster would try to find.
If there are suitable premises in
the area this could take a few days.
Provided the accountancy firm owns its building or is responsible for insuring it, the property insurance would reinstate the building (i.e. restore it to the state it was in before the fire), although this could take up to a year to complete.

Second, the loss adjuster would hire computers and office equipment for the temporary office. The insured might decide to tell customers about the move by advertising or holding an event at its new premises. The firm could be up and running again very quickly and would not have incurred a substantial loss of profits. The ICOW cover would provide
for the costs of hiring alternative premises, office equipment and informing clients of the move.

A second scenario might involve a haulage contractor. A fire at its warehouse would destroy stock and any offices.
However, the lorries, which earn the profits, would probably be out on the road or in the yard.
The loss adjuster would simply need to hire a ‘portacabin’ office and find a temporary warehouse to hold stock pending the rebuild. The profits would not be unduly affected and ICOW would be an appropriate form of interruption cover.

Question 130

A limited form of ICOW cover is provided under standard business interruption policies.

Answer 130

True

Business interruption insurance = ICOW

Question 131

Insurers are happy to pick up additional costs should the ‘costs‘ incurred reduce the size of the overall profits claim.

Answer 131

True

Business interruption insurance = ICOW

Question 132

A good example would be::
A bakery which supplies bread to the main supermarkets, It would be in the insurer’s financial interest to sub-contract the baking and packaging of bread to other bakeries, which may cost say, £500,000 up to the time of reinstatement and refurbishment etc. rather than cover the insured’s loss of profits.

Answer 132

True

Business interruption insurance = ICOW

Question 133

After all, should they lose their supermarket contracts, the claim may run into millions.

Answer 133

True

Business interruption insurance = ICOW

Question 134

The main difference between an ICOW extension under a loss of profits (business interruption) policy and a stand alone ICOW policy is that

Answer 134

a stand alone policy covers

uneconomic losses, i.e. the insured can allocate the money as they wish (within the terms of the policy of course)

Question 135

whereas under standard profits cover, the additional costs need to be

Answer 135

economic, i.e. serve to reduce the size of the profits claim.

Question 136

Liability insurance

Answer 136

Most professional indemnity insurance contain a retroactive date in the policy.

Question 137

A retroactive date USUALLY predates the inception of an insurance contract, which is NORMALLY

Answer 137

an annual policy.

Question 138

Retroactive dates are NORMALLY applied from the first date you have held

Answer 138

uninterrupted insurance.

Question 139

They are used by insurers to exclude claims relating to work which predates

Answer 139

the retroactive date from which cover has been in place.

Question 140

It is important to note that you do not have to have held uninterrupted insurance with the same insurer, only::

Answer 140

insurance has been in place.

Question 141

You should not be penalised for moving insurer, however, you may find that insurers are unable to provide retroactive dates from the date you have held

Answer 141

uninterrupted insurance if, for example, you increase your limit of indemnity.

Question 142

Dishonesty of the insured will USUALLY be excluded.

Answer 142

True

Question 143

What is D&O insurance cover?

Answer 143

protects directors against personal liability for financial loss suffered by third parties.

Question 144

The Companies Act 2006

Answer 144

codified certain responsibilities of directors and provided a statutory list of duties.

Question 145

Directors are to:

Answer 145

• Act within the company’s constitution and properly exercise powers.
• Avoid conflicts of interest. (Directors must authorise any individual director’s conflict of interests. They may do so provided there is no conflict with the constitution of the company).
• Declare an interest in any proposed transaction with the company. This must include the nature and extent of that interest.
• Exercise independent judgment.
• Exercise reasonable care, skill and diligence.
• Not accept benefits from third parties, unless this is unlikely to give rise to a conflict of interests.
• Promote the success of the company for the benefit of its members.

Question 146

Legislation states that unlike a company, for individual directors. Liability is ??

Answer 146

Unlimited

Question 147

Standard policy cover offered under a D&O policy has two elements:

Answer 147

• cover for directors and officers in their personal capacity when they are unable to claim an indemnity from the company; and
• cover to protect the company in circumstances where it is permitted to indemnify the directors or officers, such as in the repayment of legal defence costs.

Question 148

Errors and omissions (E&O) insurance?

Answer 148

As a regulated business, intermediaries are required to hold professional indemnity insurance, specifically referred to as errors and omissions insurance. Insurance brokers owe a duty to their clients (and to insurers) when arranging insurances.

Question 149

They must carry out their client’s instructions and give them proper advice. Any breach of this duty may impact their ?

Answer 149

Legal liability.

Question 150

E&O claims occur ?

Answer 150

The broker has made a mistake that has caused their client to suffer a loss.

Question 151

This NORMALLY comes to light after the client has made a claim.

Answer 151

True

E&O insurance policy

Question 152

The client is indemnified by

Answer 152

The insurance broker’s E&O insurance policy.

Question 153

The minimum limits and maximum level of policy excess are set according to the size of the ?

Answer 153

intermediary

Question 154

Medical malpractice insurance ?

Answer 154

People in the medical professions may be subject to claims on the grounds that they failed to use reasonable care.

Question 155

There is ALSO the possibly of spurious claims when treatment or advice has been suitable.

Answer 155

True

Medical malpractice insurance

Question 156

Patients may claim that they did not recover as satisfactorily or quickly as they had expected, implying that another form of treatment may have been more appropriate.

Answer 156

True

Medical malpractice insurance

Question 157

(Medical malpractice insurance ) cover is for ?

Answer 157

NHS trusts, doctors (including surgeons and consultants), nurses, dentists, pharmacists and ‘alternative’ practitioners.

Question 158

Standard policy cover provides ?

Answer 158

Protection against damages and defence costs for any claims for bodily/personal injury or damage.

Question 159

Cyber insurance is still emerging both in terms of its availability and purpose.

Answer 159

True

Cyber Insurance

Question 160

Who defines cyber insurance as covering ‘the losses relating to damage to, or loss of information from, IT systems and networks’.

Answer 160

ABI

Question 161

This is an important and OFTEN overlooked protection for consumers and commercial customers.

Answer 161

True

Cyber Insurance

Question 162

Think about your own home, internet access/connectivity is key, so much so that some now refer to it as a basic utility (like water, gas and electricity), and even as a human right.

Answer 162

True

Cyber Insurance

Question 163

Cyber insurance can relate to both damage of physical property (including the data on it),

Answer 163

True

Cyber Insurance

Question 164

Pecuniary loss following interruption,

Answer 164

True

Cyber Insurance

Question 165

Liability to third parties in respect of loss of or damage to third party property or loss of third party data.

Answer 165

True

Cyber Insurance

Question 166

Even with the high profile data breaches reported in the media, take up of these policies is mixed.

Answer 166

True

Cyber Insurance

Question 167

Their availability ALSO varies.

Answer 167

True

Cyber Insurance

Question 168

Which insurers offer comprehensive off-the-shelf products that have been built on more bespoke programmes for larger customers.

Answer 168

Specialist Insurers

Question 169

Other insurers offer enhancements to their basic products, with inner limits and restricted covers or restrictive conditions or exclusions.

Answer 169

True

Cyber Insurance

Question 170

It would make sense to separate out such scenarios – you can think of them as first party (i.e. in relation to the proposer’s assets or finances) or third party (i.e. in relation to the

Answer 170

Proposer’s duty of care to third parties and their property).

Question 171

For example, retail banks and other organisations holding sensitive customer information, particularly consumer information, may need more protection than a metal working business,

Answer 171

for example, with commercial customers only.

Question 172

The availability of such products can be affected by the proposer

Answer 172

– what existing protections do they have in place?

For example, do they have adequate network security?

Do they regularly back up their data to an external location and, if so, how frequently?

Question 173

In the widening of its cover to members to include limited forms of protection against cyber events.
The need for this cover has even been recognised by?

Answer 173

Pool Re

Question 174

This is a new and emerging cover requirement for most:.

Answer 174

businesses

Question 175

The suitability of the product will be dictated by the

Answer 175

Business seeking the insurance.

Question 176

For example, retail banks and other organisations holding sensitive customer information, particularly consumer information, may need more protection than a metal working business,

Answer 176

For example, with commercial customers only.

Question 177

This is a new and emerging cover requirement for most:.

Answer 177

Businesses

Question 178

Demand is not yet being seen in the consumer space, such as:

Answer 178

Home insurance.