General Insurance

Question 1

Building and contents insurance - What is it?

Answer 1

• Covers the loss or damage of property,
• Mortgage lenders may require that adequate cover is in place

Typical losses that a householder may be exposed to and may wish to cover are:
* Accidental damage to household items
* Damage caused by fire, flood, or a break in
* Items stolen or lost, either from the house itself or away from the house.

Cover provided
The cover provided under buildings insurance can be divided into:
* Standard perils
* Additional items of cover that are automatically included
* Optional extensions.

Question 2

Contents insurance - typical limits

Answer 2

• Single article limit – no one valuable item is to be of greater value than 5% of the contents sum insured or £2,000, whichever is less, unless specifically agreed. Cover could be limited to, say, £7,500 for all jewellery.
• Valuables limit– the total value of valuable items is not to exceed one third of the contents sum insured or a maximum monetary amount, unless specifically agreed
• Stamp collections – a limit may apply at, say, £500
• Money – usually included up to a limit of £300-£500 and includes cheques, postal orders, postage stamps, premium bonds, travellers’ cheques, travel tickets, gift tokens and phone cards in addition to cash and bank notes.

Question 3

Regarding Insurance recommendations…

Answer 3

Please note General Insurance at SJP is available through referral only. Please see the Compliance Procedures and Information Manual for more information.

Question 4

ASU and MPPI

Answer 4

Terms can be used interchangeably, though ASU applies to existing mortgages and MPPI applies to new mortgages.

• Reviewed annually
• Cover can be continued or declined
• ASU pays Lump sum benefit on death, permanent disablement, Loss of limb.
• Paid for a maximum of 1-2 years after deferment period of 30, 60, or 90 days.
• MPPI monthly benefit is tied to mortgage costs and subject to 50-65% pre-claim income capped at £1,500 or £2,000.
• No relief on contributions; the benefit is paid tax-free

Question 5

Taxation of ASU and MPPI

Answer 5

Individual arrangements
* Subject to an insurance premium tax of 12%
* All benefits are paid tax-free

Group arrangements
* Classed as an allowable trading expense ut tax relief is not permitted on any employee contribtuion
* Benefits are taxed as P11D benefits in kind on employees