set 1 Flashcards
For what type of risk would the ‘indemnity to principal’ extension to a commercial vehicle policy be needed?
A. Where the insureds business involves loading and unloading beyond the public highway
B. Where the insureds vehicle is being used in connection with some contract work
C. where the insured vehicle is being used in a local carnival
D. Where the insured leases their vehicle to others
B) Where the insureds vehicle is being used in connection to some contract work.
Book Ref: 1C2 - Indemnity to principal operates in much the same way to indemnity to hirers. The insured may be using their vehicle in connection with some contract work and one of the contract terms may require an indemnity to the other party.
Q2) The general exclusions to a private motor policy include:
A. Liability covered by any other insurance policy.
B. Loss of use
C. Mechanical and technical failure
D. Use of the insured vehicle outside of that permitted by the policy.
D) The use of the vehicle outside that permitted by the policy
Book ref: 1A3 - Limitations to private motor policies include;
1- Driving by unlicensed drivers
2- use of the insured vehicle outside that permitted by the policy
3-contractual liability
4-war risks
5-radioactive contamination & explosive nuclear assembly
6- sonic bangs
7- pollution &/or contamination
Q3) Sandra is part of the sharing economy - uses the internet to rent out her car when it is not in use. With regard to the cover provided for peer-to-peer car sharing through a private motor policy, which statement is true?
A. It is automatically covered
B. Cover can be added subject to an additional premium
C. It is usually excluded
D. Cover is included but a higher excess applies.
C) It is usually excluded
Book ref: 1A3A - New commercial business models mean that a vehicle can be used for both personal and commercial purposes. - E.g increasingly common practice of peer-to-peer car sharing over the internet ( where a person can rent out their car whilst they’re not using it).
Personal car insurance policies usually exclude peer-to-peer sharing.
Q4) The premium for John’s policy is has been calculated allowing a maximum standard no claims discount. If he makes a claim under his policy the no claims discount will drop back by:
A. One year
B. Three years
C. Five years
D. Two years
D) Two years
Book ref: 1A1E - Rates vary, but it would not be unusual to find discounts of 25% for one year free of claims, and up to 65/70% discount for five years no claims. If a claim is made, insurers will generally reduce the entitlement to a ‘no claims discount’ by dropping it back two yeas.
Q5) How, if at all, does the cover for spare parts and accessories under a commercial vehicle policy differ to that of a private car policy?
A. Under a commercial vehicle policy theft of spare parts and accessories is only covered if the insureds vehicle is stolen at the same time.
B. Under a commercial vehicle policy there is no cover for spare parts and accessories whilst they are detached from the vehicle
C. Under the commercial vehicle policy spare parts and accessories are only covered
whilst in the insureds premises.
D. There is no difference.
B) under a commercial vehicle policy, there is no cover for spare parts whilst they are detached from the vehicle.
Book ref: 1C1B - In contrast to private motor cover, there is no cover for spare parts and accessories whilst they are detached from the vehicle.
Q6) A green card is needed by a UK insured to drive a car in:
A. Austria
B. Turkey
C. Switzerland
D. Belgium
B) Turkey;
Book ref: 1A2F - Foreign use; All policies issued within the UK ( and any other country subject to EU Directives) must provide Either minimum cover required by the country being visited or where the vehicle is usually kept; whichever is greater. The insured must notify their insurer that they wish to use the vehicle abroad.
If the insured require continental use, they must ask for their policy to be extended for an additional premium (however some insurers will offer this free of charge for up to 30 days in he aggregate) you will need a green card for such trips. ( a green card is a internationally recognised certificate and is always needed to travel outside of the EU, Croatia, Iceland, Norway, Switzerland, Liechtenstein, Luxembourg and Andorra.
List of countries that are in the EU:
- Austria
- Belgium
- Bulgaria
- Croatia
- Cyprus
- Czechia
- Denmark
- Estonia
- Finland
- France
- Germany
- Greece
- Hungary
- Ireland
- Italy
- Latvia
- Lithuania
- Luxembourg
- Malta
- Netherlands
- Poland
- Portugal
- Romania
- Slovakia
- Slovenia
- Spain
- Sweden
- UK
Q7) You are driving to work. Your car is badly damaged by an accident with an uninsured driver. You take the details of the other driver and the vehicle involved. When contacting your insurer, you notice that your comprehensive motor policy includes an ‘uninsured driver promise’. How will this extension help you in this situation?
A. You will be entitled to a new replacement vehicle if yours is written off.
B. Your no claims discount will be protected
C. You will be covered for any private medical treatments needed as a result of the accident
D. You will not need to prove who was liable for the accident.
B) your no claims discount will be protected.
Book ref: A number of insurers now offer cover under their comprehensive policies for where the insureds vehicle is involved in an accident with a third party vehicle which doesn’t have insurance.
For such claims there is usually a lengthy claims period and considerable expenses. This extension will protect the insureds no claim discount and will Also protect them from the application of their policy excess (providing they can provide full details of the TP involved)
Q8) Which extension to a comprehensive private car policy is usually available without additional charge.
A. Breakdown cover
B. Increased limits for personal belongings and clothing
C. Use of the insured vehicle in connection with local elections
D. Loss of use
C) Use of the vehicle in connection with local elections.
Book ref: 1A2G - optional extensions to a standard policy cover include the following;
- Breakage of glass - standard in Comp, subject to an AP in non-comp.
- young additional drivers - if they are only using vehicle occasionally, they can be added for an AP, if using as main driver, the insurance will be rated on this.
- Loss of use - This is usually excluded from comp policies, although insurers are prepared to offer this. They also offer replacement vehicles for a limited period of time, and from an authorised repairer.
- personal accident benefits - increased capital benefits for the insured & their spouse.
- Foreign use.
- Elections - Usually free of charge, except in the event of parliamentary elections.
- Racing,competing, rallies & trials - no AP, however racing is only covered by specialist insurers, and will be covered by an AP.
- Caravans & Trailers. - TP cover for caravans on comp car policies. If further cover is required, it can be covered under non-motor policies. Comp cover can be available for a small trailer.
- Breakdown - Some insurers will provide facility to call the breakdown centre. The insured will pay for labour & time. Some insurers will pay for the call out & an hours roadside recovery subject to an AP.
- Joint policies/names - may be subject to AP, depending on cover required & if the participants have the benefit of ‘driving other vehicles’ cover.
Q9) A third party only policy extends the RTA only only policy to include:
A. Unlimited indemnity for third party bodily injury
B. Legal costs occurred in defence of a claim
C. Emergency treatment fees
D. The legally require cover for using the insured vehicle in another EU country
B) Legal costs in the event of a claim
Book ref: 1A1B
in addition to RTA cover, TP cover provides;
-Cover for vehicles when not on the road or in a public place but within territorial limits.
A limit of £20 Million for third party property damage for private car policies as standard – The min compulsory limit is £1.2 Million
Indemnity for accidents that occur when driving a car that doesn’t belong to them. – this cover is not common, there is a standard market wording amongst the insurers that do offer it that ensures that this extension is not used for securing the release of vehicles when seized by the police.
Indemnity to anyone who is driving the vehicle on the insureds order or permission, unless driving is restricted to named individuals and husband and wife only (this is common)
Indemnity to passengers, employers or business partners should they be held responsible for an accident.
Legal costs in the defence of a claim.
Limited cover for legal representation costs following a prosecution for a motoring offence
That may give rise to a claim.
Which body operates the MID?
a. Association of British Insurers.
b. Information Commissioner’s Office.
c. Driver and Vehicle Licensing Agency.
d. Motor Insurers’ Bureau.
D) The Motor Insurers Bureau.
Book Ref: 11K3C
In the UK, the MIB operates the MID. (the fourth motor insurance directive requires all member states to maintain a national database containing details of every insured vehicle)
Paula is involved in a road traffic accident with an untraced driver in July 2017. She injures her back and has to go to the hospital for weekly treatment for 6 weeks. Apart from her injuries, there is also damage to Paula’s car totalling £2,500. She successfully pursues a claim for this damage with the Motor Insurers’ Bureau. How much will Paula receive in settlement of her vehicle claim?
a. £2,200.
b. £2,500.
c. £1,250.
d. £2,100.
D) 2,100
Ref: 11G3A - The untraced drivers agreement 2017, amended the original; there is now a £400 excess to all property damage claims.
Which of the four options for settling claims is used least frequently by insurers?
a. Repair.
b. Cash.
c. Replacement.
d. Reinstatement.
D) Reinstatement
Ref: 11H1
One further course of action open to insurers in the case of extensive damage or complete destruction of say; a building is to arrange to reinstate by taking control of the repair or rebuilding themselves. However, reinstatement would mean accepting responsibility to pay the full amount even if it exceeded the sum insured. Therefore, insurers seldom take this course of action.
The Insurance Fraud register contains details of which parties where they have acted fraudulently towards an insurer:
a. third parties only.
b. policyholders, third parties and suppliers.
c. policyholders only.
d. policyholders and third parties only.
B) Policy holders, Third parties and suppliers.
Ref:11K2
Where the insured commits fraud in relation to a claim, the insurer can avoid the contract from the time of the fraudulent act. Having given notice of this to the insured, insurers are NOT liable for:
a. the fraudulent claim only.
b. any subsequent claims only.
c. any claims under the policy.
d. both the fraudulent and any subsequent claims.
D) Both the fraudulent and subsequent claims.
Ref: 11K1
Where an insured commits a fraudulent claim, the insurer has no liability to pay that claim, and as a consequence, any payment already made can be recovered.
The insurer, on giving notice to the insured may treat the contract as void from the fraudulent act. The insurer may refuse any liability in respect of a claim of a claim that is made after it, i.e if they were to terminate the contract. additionally, the premium is non-refundable at the discretion of the insurer.
For which type of claim would an insurer’s claim form ask for details of any independent witnesses?
a. Motor.
b. Fire.
c. Theft.
d. Professional indemnity.
A) Motor
Book ref: 11C1A
It is the role of which body to monitor an insurance company’s claims reserves?
Select one:
a. The Prudential Regulation Authority.
b. The Financial Services
Compensation Scheme.
c. The Financial Conduct Authority.
d. The Association of British Insurers.
A) The prudential regulation authority
Book Ref: 11I
An ‘ex gratia’ payment is one which:
a. is made by insurers as a result of a judgement by the Financial Ombudsman.
b. is made by the insurer even though there is no policy liability.
c. is made by the insured where premiums are outstanding at the time of a claim.
d. is made by a third party as a result of insurers pursuing subrogation rights.
B) Is made by the insurer even though there is no policy liability.
Ref: 11A
Ex gratia payments are payments are claim payments made ‘out of payments’ where the insurer has no liability to pay the claim. but may do so for various reasons.
For which claims under which type of policy are insurers most likely to request sight of a copy of the accident book as supporting evidence?
a. Motor.
b. Employers’ liability.
c. Sickness.
d. Personal accident.
B) Employers liability
Ref: 11C2
in addition to a claims form, certain types of evidence are needed for certain claims;
Accident claims; An accident book will be examined.
