Chapter 3 - Package Policies

Question 1

what does homogeneity of risks mean?

Answer 1

the situation where many risks share characteristics and follow similar trends

Question 2

what are the 2 ways of settling household claims?

Answer 2

1. indemnity
2. reinstatement

Question 3

how does indemnity work for household claims?

Answer 3

a deduction is made for wear and tear - the amount paid is the amount it would cost to replace the item with something the same age and same condition

Question 4

how does reinstatement work for household claims?

Answer 4

the full cost of replacing the item as new is paid - most insurers make a deduction for wear and tear and sometimes if sums insured are inadequate

Question 5

what should the building sum insured represent?

Answer 5

the rebuild cost at the time rebuilding is complete

Question 6

in the terms of household insurance, how is building defined?

Answer 6

the main structure of the private dwelling including garages, sheds, greenhouses and other outbuildings (anything that would be left behind when moving)

Question 7

what are example of perils on buildings?

Answer 7

fire, lightning, explosion and earthquake, riot and malicious damage, storm/flood, falling trees, escape of water and theft

Question 8

what cover is usually excluded for unoccupied buildings?

Answer 8

loss or damage while the building is unfurnished or unoccupied for more than 30 - 60 days

Question 9

what is excluded under storm/ flood?

Answer 9

damage caused by frost, subsidence and damage to gates, fences and hedges - always has an excess

Question 10

what does falling trees cover exclude?

Answer 10

damage to walls, gates, fences and hedges

Question 11

what does escape of water cover?

Answer 11

bursting or over flowing of water tanks and pipes and includes any fixed domestic water and heating installations, washing machines and other equipment

Question 12

what does escape of water exclude?

Answer 12

damage while the building is unfurnished or unoccupied for more than 30 - 60 days

Question 13

what does escape of oil cover?

Answer 13

escape of oil from any fixed oil fired heating system

Question 14

what does impact cover include?

Answer 14

impact or collision from aircrafts/ aerial devices, road vehicles or animals

Question 15

what does impact cover usually exclude?

Answer 15

damage by pets

Question 16

what does subsidence/ ground heave slip exclude?

Answer 16

loss or damage caused by:

1. normal shrinkage or settlement
2. coastal or riverbank erosion
3. demolition or structural repair

Question 17

what is usually the excess for subsidence?

Answer 17

£1k

Question 18

what does accidental breakage of glass and sanitary fixtures include?

Answer 18

accidental breakages of fixed glass in windows, doors, skylights, conservatories etc that form part of the building also includes baths and other sanitary fittings

Question 19

what is legal fees and architects/surveyors fees and cost of debris removal cover?

Answer 19

covers reasonable legal fees incurred in the reinstatement of the building and also the removal cost of clearing debris

Question 20

what is loss of rent cover?

Answer 20

cover provided in respect of ground rent for a max of 2 years and loss of rent for any part that becomes uninhabitable

Question 21

what can loss of rent also include?

Answer 21

reasonable costing alternative but similar accommodation while the premises is uninhabitable - usually capped at 10/15% of building sum insured

Question 22

what is the accidental damage extension?

Answer 22

most insurers offer this subject to a higher premium rate and subject to an excess

Question 23

what does the accidental damage extension exclude?

Answer 23

damage whilst property is let, wear and tear, damage caused by pets and vermin

Question 24

how is contents defined?

Answer 24

household goods and personal effects belonging to the insured or family member living in the property

Question 25

when is theft or attempted theft of cash usually excluded under contents?

Answer 25

if there is no forcible and violent entry/ exit

Question 26

what is typically covered automatically under contents insurance?

Answer 26

1. temporary removal 2. clothing or personal effects 3. accidental breakage 4. home office equipment (usually 5k limit)

Question 27

what is a 'single article limit'

Answer 27

no picture/art, jewellery etc will be treated as a greater value than 5% of the building sum insured or than a fixed amount

Question 27

what is a 'valuable limit'

Answer 27

the total value of precious metal jewellery may be restricted to 1/3 of the total contents sum insured

Question 28

what exclusions normally apply to contents insurance?

Answer 28

1. property insured under another policy 2. motor vehicles 3. livestock 4. medals/ coins (unless specifically insured)

Question 28

what extensions are available for contents insurance?

Answer 28

1. accidental damage to entertainment equipment 2. accidental damage while in the course of removal

Question 29

what limit applies to accidental injury and accidental damage to material property?

Answer 29

a limit of indemnity of £2 million applies to any one claim for employers legal responsibilities limit is at least £10 million

Question 30

what is an 'all risks' basis?

Answer 30

property is insured against any peril that is not specifically excluded

Question 31

what is the definition of unspecified items?

Answer 31

cover is provided away from the specified adress

Question 31

what are specified items?

Answer 31

items which exceed the unspecified single article limit or to which special terms apply - the sum insured should represent the replacement value

Question 32

what are the exclusions for personal possessions?

Answer 32

1. wear, tear and depreciation 2. corrosion 3. mechanical and electrical breakdown

Question 32

what is the general limit of bicycles unless the value is specified?

Answer 32

£500 - £1000

Question 32

what does the money extension include?

Answer 32

'all risks' cover that is wider than under the standard contents sections - includes accidental loss

Question 33

what cover is generally excluded on bicycles?

Answer 33

1. loss or damage to parts/ accessories 2. used for competitive events 3. theft whilst left unattended

Question 34

what are some risks covered by travel insurance?

Answer 34

cancellation charges, injury, death, medical fees following illness and loss of personal possessions

Question 35

is there a standard market wording for travel policies?

Answer 35

no

Question 36

what does baggage cover include?

Answer 36

loss or damage to personal baggage - sum insured is usually between 1-2k

Question 37

what does loss of deposits cover mean under a travel policy?

Answer 37

provides reimbursement of deposits and payments due to necessary and unavoidable cancellation beyond their control

Question 38

what does travel interruption cover?

Answer 38

failures of public transport to deliver the insured to the departure point

Question 39

in commercial insurance, who do package policies cater for most?

Answer 39

small businesses

Question 40

what property is covered under commercial package policies?

Answer 40

almost everything in the premises including stock

Question 41

what is business interruption?

Answer 41

cover for loss of trading profit and increases in the cost of working due to an interruption caused by an insured peril