Insurance products: commercial insurance Flashcards
What is ‘All risks’ insurance?
All risks insurance covers all accidental damage or loss to property unless specifically excluded. It is designed to offer broader protection than standard fire policies, but it does not cover everything.
What are the exclusions in all risks insurance?
Exclusions can be divided into four groups: 1. Absolute exclusions (war, pollution, contamination, consequential loss). 2. Gradually operating exclusions (corrosion, rust, wind/rain damage). 3. Specific cover written into the policy (money, glass, subsidence). 4. Property or risks that belong to other types of business (e.g., motor vehicles, aircraft).
What does theft insurance cover?
Theft insurance covers property loss or damage caused by theft. However, the loss must involve a break-in with force or violence; loss without forcible entry (e.g., walking in and stealing) is usually not covered.
How is theft insurance rated?
Theft insurance is often rated using the estimated maximum loss (EML), which is an estimate of the worst possible financial impact from a theft.
What does glass insurance cover?
Glass insurance covers damage to fixed glass, such as windows, doors, showcases, and partitions. It usually includes an extension to cover the costs of boarding up broken glass until it can be replaced.
What is covered by money insurance?
Money insurance covers the loss or damage of negotiable and non-negotiable money. For negotiable items (like banknotes), cover is limited and varies based on location and timing, while non-negotiable items (like crossed cheques) have higher coverage limits.
What is pecuniary insurance?
Pecuniary insurance covers direct financial losses that occur as a result of a business interruption, such as loss of earnings or additional expenses due to property damage.
What is business interruption insurance?
Business interruption insurance covers the loss of earnings and additional expenses caused by material damage to the property covered under the property insurance policy. It is based on the gross profit of the business during the indemnity period.
How is gross profit calculated for business interruption insurance?
Gross profit is calculated by subtracting opening stock and uninsured working expenses from turnover and closing stock.
What are the main items insured under a business interruption policy?
Loss of gross profit and increased cost of working (ICOW), which includes the costs incurred to reduce the loss of profit after the insured event.
What is the indemnity period in business interruption insurance?
The indemnity period is the maximum time over which the insurance policy will cover the financial losses of a business, starting from the occurrence of the event and ending at the end of the chosen period.
What are some optional extensions in business interruption insurance?
Optional extensions may include coverage for specified suppliers, unspecified suppliers, specified customers, transit, prevention of access, public utilities, notifiable diseases, contract sites, and increased cost of working (ICOW).
What are specified suppliers in business interruption insurance?
Specified suppliers are third-party suppliers whose loss or inability to deliver goods may prevent the insured from producing their goods. These are typically covered under the policy with a survey to assess the risk.
What is the coverage for specified customers?
Specified customers refer to clients whose inability to purchase the insured’s goods due to a loss at their premises can lead to a financial loss for the insured.
What is ‘Prevention of access’ coverage in business interruption insurance?
This extension covers financial loss if customers are unable to access the insured premises due to property damage in the surrounding area.
How does public utilities coverage work in business interruption insurance?
This coverage applies if a failure of public utilities (gas, electricity, or water) affects the insured’s premises, leading to a loss of profits.
What is the increased cost of working (ICOW) in business interruption insurance?
ICOW covers additional expenses incurred to minimize the loss of profits following an insured event. It is different from traditional business interruption coverage because it covers costs that help reduce the impact on profits.
How does ICOW differ from a standalone ICOW policy?
A standalone ICOW policy covers uneconomic losses (losses that are not tied to reducing the profit claim), while under a traditional business interruption policy, the ICOW expenses must be economic (i.e., reduce the size of the profit loss).
What impact did COVID-19 have on business interruption insurance?
COVID-19 highlighted the need for clearer coverage under business interruption policies. The FCA tested various policy wordings and clarified that certain business interruption claims related to COVID-19 should be covered, particularly where there was no physical property damage but business was interrupted due to government restrictions.
What is legal expenses insurance?
Legal expenses insurance covers a firm’s or company’s costs arising from the need to take action in the courts or defend an action brought against the insured, including the cost of employees’ time spent in court.
What does employment dispute coverage in legal expenses insurance cover?
It covers the costs of defending unfair dismissal or racial or sexual discrimination claims, as well as any awards made against the insured if unsuccessful.
What is criminal prosecution defense cover?
It covers the cost of defending an action against the insured, usually under health and safety legislation. Fines are not covered.
What is property disputes cover?
It covers property disputes, such as disputes with neighbors over planning applications.
What does motor cover include in legal expenses insurance?
It includes uninsured loss recovery and defending motor prosecutions.
What is patent, registered designs, copyright, and trademarks cover?
It covers defending claims against alleged breaches of patents, copyrights, and trademarks.
What is taxation proceedings cover?
It covers costs related to taxation proceedings.
What is employers’ liability insurance?
Employers’ liability insurance covers employers against liability for bodily injury or disease sustained by their employees during the course of employment.
What is the minimum coverage for employers’ liability insurance in Great Britain?
The minimum coverage required is £5m, though insurers typically provide up to £10m in respect of any event.
What optional extensions are available in employers’ liability insurance?
Optional extensions may include defense costs and expenses, compensation for court attendance, and unsatisfied court judgments.
What is public liability insurance?
Public liability insurance covers legal liability to third parties for bodily injury, death, disease, illness, or property damage during the policy period.
What is product liability insurance?
Product liability insurance covers legal liability for bodily injury or property damage caused by goods or products manufactured, sold, or distributed by the insured.
What does pollution liability insurance cover?
It covers pollution or contamination caused by a sudden, identifiable, unintended, and unexpected incident during the policy period.
What is professional indemnity insurance?
Professional indemnity insurance covers professionals against liability for injury, damage, or financial loss to clients or the public due to breaches of professional duty or negligence.
What is directors’ and officers’ (D&O) insurance?
D&O insurance protects directors against personal liability for financial loss suffered by third parties.
What is errors and omissions (E&O) insurance?
E&O insurance covers claims where a broker made a mistake that caused their client to suffer a loss.
What is medical malpractice insurance?
Medical malpractice insurance covers medical professionals against claims for failure to use reasonable care, including protection against damages and defense costs.
What is cyber insurance?
Cyber insurance covers damage to physical property, pecuniary loss following interruption, and liability to third parties in relation to the loss or damage of property or data.
Claims made
Professional indemnity based on claims made during policy period as opposed to losses occurring during policy period
Retroactive date is the earliest date the work claimed against can have occurred
