Policy Awareness

Question 1

What three important elements must exist for a contract to be legally binding?

Answer 1

Offer, Acceptance & Consideration

Question 2

What are the four categories contained in the proposal?

Answer 2

General questions, Specific questions, Declaration & Warning/Important notes

Question 3

List four things that will be provided to the policyholder at the start of the insurance contract for compulsory insurance?

Answer 3

Policy booklet
Policy schedule
Certificate
Information & Services booklet

Question 4

How can payment be made?

Answer 4

Direct Debit, Credit card, Cheque or Cash

Question 5

What is IPT?

Answer 5

Insurance Premium Tax – the tax payable on most general insurance policies

Question 6

What is the ‘recital clause’?

Answer 6

Sets the scene by referring to both parties coming together to form a contract. It states the proposal is also a part of the contract.

Question 7

What are the ‘operative clauses’?

Answer 7

The scope of cover in detail

Question 8

What are ‘conditions’?

Answer 8

Rules the policyholder must abide by

Question 9

Provide two market conditions:

Answer 9

Claims Procedures
Reasonable Care
Fraud
Arbitration
Contribution
Alteration
Cancellation

Question 10

In what 2 circumstances can a breach of the ‘duty of disclosure’ arise?

Answer 10

Misrepresentation & Non-Disclosure

Question 11

What are ‘warranties’?

Answer 11

A promise made by the insured relating to facts or performance relevant to the risk or the thing that is insured

Question 12

What are ‘exclusions’?

Answer 12

These describe what is not covered, i.e. they define the boundaries of cover.

Question 13

List 3 common market exclusions:

Answer 13

War and related perils
Riot and civil commotion
Radioactive and nuclear assemblies
Terrorism
Pollution/contamination
Sonic bangs

Question 14

What is an excess?

Answer 14

An excess is the amount payable by the insured towards the cost of a claim.