The structure and content of insurance policies Flashcards
What do all basic general insurance policies consist of?
- heading
- recital clause (preamble)
- signature
- operative clauses (what is covered)
- exclusions
- conditions
- definitions
- policy schedule
- information and facilities.
What conditions are commonly found in general insurance policies?
- duties of the insured
- alteration
- action in the event of a claim
- fraud
- reasonable precautions
- contribution
- average
- subrogation
- arbitration
- cancellation.
What are representations?
Statements made during the negotiation period leading up to the formation of the contract.
In what circumstances are insurers unable to repudiate claims due to a breach of warranty?
FSA rules prevent repudiation of claims from consumers where the circumstances of the loss are unconnected to the breach.
In what circumstances are insurers unable to repudiate claims due to a misrepresentation?
FSA rules prevent repudiation of claims from consumers unless the misrepresentation is negligent.
What is an excess?
An excess is the first amount of each and every claim which is not covered by the policy.
The excess may be compulsory (imposed by the insurer) or voluntary (accepted by the insured in return for a premium discount).
What is a deductible?
To many people a deductible is simply a very large excess but there are cases when their application, particularly with regard to liability insurances can differ.
Deductibles are prevalent in commercial insurance.
What is a franchise?
A franchise is a threshold used to decide whether any claim payment is made.
Unlike an excess, it is not deducted from the amount of any claim. Instead, no payment is made for any claim falling below the franchise; however, claims that exceed the franchise are paid in full.
Time franchises are common in income protection and personal accident and sickness insurance policies.
