Module 7 Flashcards
The proposer has a duty to provide information relating to the risk to be insured.
What is the correct definition of a material fact?
A. A fact that an underwriter needs to know before paying a claim
B. A fact that needs to be revealed when making a claim
C. A fact that an underwriter needs to know before accepting a certain risk
D. A fact that the underwriter should already know
C. A fact that an underwriter needs to know before accepting a certain risk
Tony’s Tiles want to take out fire insurance on their new production plant. Which of the following would you consider to be ‘material facts’ about which the insurer needs to be told?
(2 correct answers)
A. The premises are fitted with a sprinkler system
B. The company made four fire damage claims in two years against its previous insurer
C. The nearest fire station is twenty miles away from the production plant
D. The oxyacetylene gas cylinders are stored at the premises
B. The company made four fire damage claims in two years against its previous insurer
D. The oxyacetylene gas cylinders are stored at the premises
Which of these are hazards?
(Select all that apply)
A. A thatched roof on a cottage proposed for fire insurance
B. A windstorm which destroys crops
C. A proposer with a poor previous claims history
D. A theft of property
A. A thatched roof on a cottage proposed for fire insurance
C. A proposer with a poor previous claims history
What is the name given to hazards which are likely to reduce the frequency or severity of loss such as fire alarms, security locks and protective clothing.
A. Poor hazards
B. Good hazards
B. Good hazards
What is the name given to hazards which increase the frequency of severity of loss. Examples include buildings of lightweight or wooden construction, young or inexperienced drivers and hazardous occupations.
A. Poor hazards
B. Good hazards
A. Poor hazards
Which of the following are examples of poor physical hazard relating to a fire insurance risk on factory premises?
(Select all that apply)
A. The factory building being of wooden construction
B. The factory owner having a criminal record for fraud
C. Dangerous chemicals being stored on the premises
A. The factory building being of wooden construction
C. Dangerous chemicals being stored on the premises
The most common mechanism by which an underwriter obtains information about the risk to be insured is a proposal form.
For which of the examples below would you expect a proposal form to be used to collect all the necessary information about the risk?
(Select all that apply)
A. Foamo soaps want to insure their new £20 million factory against a variety of perils
B. Pauline wants to arrange comprehensive motor insurance cover on her new Mini
C. Sailing Today wants to insure their new luxury cruise ship against loss damage or liability risks
D. Brad wants to arrange ‘all risks’ cover on the contents of his house
B. Pauline wants to arrange comprehensive motor insurance cover on her new Mini
D. Brad wants to arrange ‘all risks’ cover on the contents of his house
The questions asked by an insurer during the proposal stage can be sub-divided into general questions about the proposer, and specific questions about the risk to be insured.
Which of the following pieces of information would be categorised as specific questions.
(Select all that apply)
A. The name of the proposer
B. The proposer’s occupation
C. Construction details of the premises
D. Sums to be insured
C. Construction details of the premises
D. Sums to be insured
Peter owns a small bookstore and applies for a quote to insure his premises. Following a claim for malicious damage at the store, the insurer discovers that Peter knowingly did not declare a similar previous incident at the same store for which he did not make a claim. The insurer’s application form only requested information regarding previous claims.
Does Peter’s insurer have to pay the claim?
A. Yes
B. No
B. No
Sometimes, a form is drawn up by the intermediary or insurer, noting the proposer’s verbal/screen answers and requesting the proposer to sign the form and return it to the insurer as evidence.
This is known as a:
A. Statement of facts
B. Eligibility statement
A. Statement of facts
Sometimes there is no paper transaction and for many types of personal insurances the proposer may simply be asked to agree with an ‘eligibility statement’, where the proposer confirms that the risk proposed is in accordance with a number of ‘standard’ assumptions made by the insurer.
This is known as a:
A. Statement of facts
B. Eligibility statement
B. Eligibility statement
Sally, a beauty therapist, obtains a quotation to insure her salon under a package policy. Before she has a chance to accept, her salon is vandalised. What effect, if any, will the loss incurred have on her quotation?
A. None, once a quotation is issued the insurer is legally bound to honour it
B. The vandalism is a material circumstance which must be disclosed to her insurer, who have the right to amend their quotation
B. The vandalism is a material circumstance which must be disclosed to her insurer, who have the right to amend their quotation
On 1 May, XYZ Insurance plc sends a quotation, with no set period for acceptance, to Chop Shop the hairdressers in response to their proposal for insurance.
On 14 May, Chop Shop conveys their acceptance to XYZ.
Assuming there is no change in material circumstances from the time the quotation is issued to the time it is accepted, select the correct statement(s) below.
A. Chop Shop had until the 1 June to convey their acceptance to XYZ
B. XYZ could have withdrawn their quotation at any time before the 14 May
C. XYZ can decline Chop Shop’s acceptance
B. XYZ could have withdrawn their quotation at any time before the 14 May
When does an insurance contract come into effect?
A. Once the insurer has issued a quotation
B. Once the proposer has accepted the insurer’s quotation
C. Once the proposer has paid, or agreed to pay, the premium
C. Once the proposer has paid, or agreed to pay, the premium
Which of these would you expect to see recorded on the motor insurance certificate?
(Select all that apply)
A. Registration number of the vehicle
B. Name of policyholder
C. Date of commencement and expiry of cover
D. Scope of cover
E. Persons or classes of persons entitled to drive
A. Registration number of the vehicle
B. Name of policyholder
C. Date of commencement and expiry of cover
E. Persons or classes of persons entitled to drive
