M93 - Chapter 6 Flashcards
Property insurance - When will average not apply?
A building & contents occupied solely for residential use.
Places of religious worship & Sunday schools
Items related to agricultural use
Rent (has own method)
When does the average condition apply from in the event of a claim?
At the time of the loss.
After a claim occurs the damaged property is no longer insured, unless?
The insured arranges additional cover for a premium
There is an ‘automatic re-instatement’ clause.
How re-instatement different to indemnity?
Re-instatement applies to property, and agrees to ‘re-instate’ the property to the original condition no matter the point in time of the claim (1,2,3 years). This means the sum insured must be adequate to include rising costs of building materials, inflation etc.
Betterment rules do apply.
In times of high inflation was % was applied to re-instatement claims.
85% as long as sum insured was within 85% of the loss. Subject to
- Works starting immediately
- Re-instatement actually happens
- Any other insurances were on like for like basis, to avoid contribution issues,
What is ‘day 1’ cover.
At point of inception the insured can choose to insure an additional % of cover to allow for future inflation costs.
EG Choose ‘Day one’ ‘15%’
If the 15% does not cover the total loss, the insurer will NOT be liable to more than 15% above the original sum insured. Its important the insured declares value at each renewal.
For ‘Index linked’ sums insured which indexes are mainly used?
For Buildings - Index supplied by Royal Institute of Chartered surveyors (RICS)
For Contents - Retail Price Index (RPI)
When might a building be considered ‘obsolete’ following a claim?
Impractical to re-build given design and structure
Not listed or protected for any reasons
No longer fit for purpose
In these cases a new building may be purchased, or a modern one built in its place.
European Union & Public Authorities clause - What does it do?
Allow for costs in order to comply with building regulations associated to
- EU Legislation
- Acts of Parliament
- Any Byelaws
The local authority may insist on undamaged parts of a building being improved, what % will insurers typically allow for this?
15% of sum insured.
Capital addition’s (alterations) rules?
EG The Insured buys some more plant.
- Covered retrospectively, subject to AP
- Declared within 6 months
- Does not exceed clause limits.
2 Exclusions to debris removal
- Items that fall/spread outside the insured land
2. Pollution of gardens/lawns, if outside the sum insured,
Other covers available property damage. (Easy ones)
Professional fee’s - Surveyors etc.
Customers goods
Contract price settlement - refers to goods ordered, but not yet delivered that the insured is responsible for.
Metred utilities (Water escape)
Trace & Access
Covers available under property damage (Hard ones)
Data processing & Equipment - Policy responds if air-conditioning fails and servers overheat (not widely available)
72 Hour clause (Floods & Storms) - Insured can choose where within the 72 hours cover starts from.
Freeholders, Mortgagees - Notes their interest.
Theft damage to buildings - Provides cover for buildings not insured by the policy holder
Leased/rented differences in cover - Steps down and covers differences if the tenants insurance does not cover.
Re-instatement to match - Pays to upgrade tech, if old stuff is now out of date (Not considered betterment)
Inadvertent omission to insure - Allows for retrospective cover for anything accidentally missed, subject to notification prior to claim and AP
For stock cover - what % to MONTHLY
declaration policies usually start with and how is the final premium calculated?
- 75%
- The average of all the declarations * the rate.
Average does apply.
