IF2 - Module 11 Flashcards
What are the insurer’s responsibilities in the claims process?
The insurer’s responsibilities in the claims process include verifying that:
- cover was in force at the time of the loss;
- the insured is the person named in the policy;
- the peril is covered by the policy;
- the insured has taken reasonable steps to minimize the loss;
- all conditions and warranties have been complied with;
- the duty of fair presentation has not been breached;
- no exceptions are appropriate; and
- the value of the loss is reasonable.
These are the legal requirements for a valid claim.
A claim may be invalid or only partially met if these conditions are not satisfied, or if fraud can be proved by the insurer.
A full indemnity will not be provided to the insured where…
- the sum insured or limit of indemnity is less than the value of the claim - the insurer’s liability is restricted to the sum insured or limit;
- the average clause operates - where the policyholder has under-insured their property; or
- an excess applies - the insured is responsible for the first amount of a claim.
What are express duties?
Express duties are those written into the contract. They are usually found as the claims conditions in the policy and include: prompt notification to the insurer, reasonable prevention of further damage and proof and details of loss within a certain timescale.
What are implied duties?
Implied duties are those imposed by common law and include: acting as if uninsured, notifying appropriate authorities, taking steps to prevent loss from spreading and not hindering the insurer in investigating the claim.
What is the purpose of a claim form?
This allows the insurer to:
- establish if the insured is entitled to indemnity under the policy - by checking that the loss or damage is covered and that the information given on the form agrees with that given on the proposal form;
- obtain enough 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;
- and decide whether there is likely to be any possibility of recovery rights against a third party.
For which class of insurance should a claim form be completed, following a risk event, even if the insured does not intend to claim?
Motor
In 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 accident are reported to the insurer.
What information does a motor insurance accident report form seek?
A motor insurance accident report form seeks information under the following headings:
- 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 the other parties involved, and property damaged, or injuries sustained; and
- particulars of any independent witnesses.
Where contribution applies, the formula for calculate each insurers proportion is?
(Sum insured by individual insurer / Total sums insured) * Loss = Insurer’s liability
Where the condition of the average applies, the formula for calculating the average is?
(Sum insured / Value at risk) * Loss = Claim payment
What is the subrogation condition?
The subrogation condition in an insurance policy modifies the common law position so that the insurer can take steps in the name of the insured before or after any payment is made. However, it cannot obtain any recovery until after it has paid the insured.
What is arbitration in insurance?
The arbitration clause is concerned with disputes over the amount to be paid under a policy.
It states that all such disputes between the policyholder and the insurer will be referred to an independent arbitrator whose decision is binding on both parties.
It does not apply to disputes about whether a claim is covered under the policy, or to disputes with third parties who may seek to claim against the policy.
What is a bi-lateral agreement?
Nowadays, more and more insurers are entering into bi-lateral agreements with others who operate in the same market.
By doing this they can engage with similar, like-minded insurers, which may share the same philosophy or underwrite a similar book of risk.
How does the ABI personal effects agreement affect motor accidents/thefts?
Claims for personal effects lost or damaged in a motor accident or stolen from a vehicle (including attempted theft) will be settled by the insurer against whom the claim is made subject to their policy limit (if any) without requesting contribution from another insurer who covers the same loss.
How does the ABI personal effects agreement affect motor accidents/thefts?
The insurer of the specified item will meet the claim unless the item is specified under another policy. In this case they will settle the claim but may recover a contribution from the other insurer.
How does the ABI personal effects agreement affect other/general circumstances?
All other claims for loss of or damage to personal effects will be handled by the insurer against whom the claim is made. That insurer may obtain contribution to their settlement from the other relevant insurer(s) if the settlement exceeds £200 and the other insurer is not a motor insurer.
