Chapter 4 - Types Of Insurance Products Flashcards
(39 cards)
List the main types of Liability Insurance
Employers Liability
Mother third party liability
Product liability
Public Liability
Professional Indemnity + Errors & Omissions
Marine & Aviation liability
Directors & Officers liability
Employment practices liability
Cyber
Environmental (& Pollution) Liabilty
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What are the benefits of liability insurance?
The basic benefit of any liability insurance is an amount to indemnify the policyholder fully against a financial loss.
This benefit may be restricted by:
- A maximum amount per claim, or an aggregate maximum amount per year
- An excess.
List the main types of property insurance.
Home Property
Commercial Property
Contents (private or commercial)
Vehicles
Marine Craft
Aircraft
Goods in transit
Construction (Property under construction)
Engineering plant & machinery
Extended warranty
Crops
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List the main types of Financial Loss Insurance
Fidelity Guarantee
Credit Insurance
Payment Protection Insurance (Creditor Insurance)
Business Interuption Cover (Consequential Loss)
Legal Expense Cover
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List the main groupings under which general Insurance Types Fall
Liability Insurance
Property Insurance
Financial Loss Insurance
Fixed Benefits Insurance
Define Employers Liability Insurance
Employers’ liability indemnifies the insured (the employer) against the legal liability to compensate an employee / their estate for bodily injury, disease or death suffered, owing to negligence of the employer. The benefit may be regular payments or a lump sum. The perils include accidents and exposure to harmful substances or working conditions. The main measure of exposure is payroll. The main risk factor is the type of industry.
Define Motor Third Party Liability
Motor third party liability indemnifies the owner of a motor vehicle against compensation to third parties for personal injury or damage to their property. Cover is usually on a losses-occurring basis. The measure of exposure is the vehicle-year. The risk and rating factors are as for motor property damage.
Define Marine and Aviation Liability
Marine and aviation liability indemnify the insured against the legal liability to compensate a third party for bodily injury, death or damage to property arising out of operation of the vessel or aircraft. Exclusions are likely to include terrorism, war and illegal activities. Cover is usually on a losses-occurring basis. Possible measures of exposure include passenger kilometres / voyages and in-service seats. A wide range of rating factors is used in practice.
Define Public Liability Insurance
Public liability indemnifies the insured against legal liability for the death of or bodily injury to a third party or for damage to their property from any other cause. The perils will depend on the type of policy. The most common measure of exposure is turnover.
Define Product Liability Insurance
Product liability indemnifies the insured against legal liability for the death of or bodily injury to a third party or for damage to their property that results from a product fault. Cover is likely to be on a claims-made basis. Perils include faulty design, faulty manufacture, faulty packaging and incorrect or misleading instructions. The most common measure of exposure is turnover. The nature of the product is an important risk factor, however each policy will be individually underwritten
Define Professional Indemnity Insurance
Professional indemnity indemnifies the insured against legal liability for losses resulting from negligence in the provision of a service. Cover is usually on a claims-made basis. Perils may include wrong medical diagnosis, and errors in a medical operation or an actuarial report. The most common measure of exposure is turnover. The nature of the profession is an important risk factor, however each policy will be individually underwritten.
Define Directors and Officers Liability Insurance
D&O liability is a type of professional indemnity cover that indemnifies the insured against the legal liability to compensate third parties owing to any wrongful act of the insured director. Cover is usually on a claims-made basis. Perils include wrongfully allowing a company to continue operating, acts resulting in the insured being declared unfit for the role and allowing the publication of false financial statements. The nature of the profession is an important risk factor, however each policy will be individually underwritten.
Define Employment Practices Liability
Employment practices liability is a form of D&O insurance, specifically covering risks relating to employment practices. Perils include unfair or constructive dismissal of an employee and discrimination against an employee. Cover is usually on a claims-made basis. The nature of the company is an important risk factor, however each policy will be individually underwritten
Define Environmental Liability Insurance
Environmental liability indemnifies the insured against the legal liability to compensate third parties for the death of or bodily injury to a third party or for damage to their property as a result of unintentional pollution for which the insured is deemed responsible. Cover is usually on a claims-made basis. Perils are any incident causing environmental pollution. Each policy will be individually underwritten.
Define Cyber Insurance
Cyber insurance will indemnify the insured against losses incurred as a result of a specified cyber or data loss event. This may include legal expenses. Cover includes liability for businesses that hold sensitive customer data, use computer systems to conduct their business, or have a website. Policies are likely to be individually underwritten to reflect the different needs of the policyholders.
Define Residential, Commercial and Industrial Buildings Insurance
Residential, commercial and industrial buildings insurance usually pays the amount needed to restore the property to its previous condition, subject to any excess / deductible. The main perils are fire, explosion, lightning, theft, storm, flood, subsidence and damage caused in putting out fires. The exposure measure is usually the sum-insured year. The sum insured should be the cost of rebuilding / restoring the property. Subsidence claims may suffer reporting delays. Many rating factors are likely to be used.
Define Moveable Property Insurance
Moveable property can pay an amount equal to the replacement value of the item, or may be on a ‘new for old’ basis. The main perils are fire and theft. Malicious and accidental damage may also be covered. The exposure measure is usually the sum-insured year, although this may be less appropriate for commercial covers, where the level of stocks is very variable. Determining levels of stocks may lead to settlement delays. Many rating factors are likely to be used.
Define Land Vehicle Insurance
Land vehicle insurance provides a benefit to repair the vehicle, subject to a maximum of the replacement value of the vehicle. The exposure measure is the vehicle-year. Many rating factors are likely to be used, including the level of excess.
Define Marine and Aircraft Property Insurance
Marine and aircraft may cover loss of or damage to the craft and the cargo. Perils include fire and explosion. The exposure measure may be the insured value of the hull or aircraft and may allow for cargo. Claims may not be reported until the vessel reaches a port. There are no definitive rating factors.
Define Goods in Transit Insurance
Goods in transit is sometimes sold alongside marine and aviation insurance. The main perils are damage, loss and theft. The exposure measure is typically the consignment value. Claims may not be reported until the end of the journey. The main rating factors are mode of transport, nature of goods, type of storage, time period / number of stages of journey and length of time spent at warehouse.
Define Construction Insurance
Construction insurance may be provided for projects over the course of their lifetime (and sometimes beyond), and so may last for longer than a year. The main perils are damage, destruction, design defects, faulty parts and failure to finish the construction project. The exposure measure may be the value of the contract, which is unlikely to be uniform over the lifespan of the project, so allowance must be made for this. The main rating factors are type and term of project, contracting firm, materials and technology used and location of project.
Define Engineering Insurance
Engineering is similar in nature to construction. The main perils are machinery breakdown, explosion and electronic failure. The exposure measure may be the sum insured value of the contract, which is unlikely to be uniform over the lifespan of the project, so allowance must be made for this. Claim costs are likely to be fairly uniform, although there may be accumulations. Rating factors are similar to those for construction.
Define Extended Warranty Insurance
Extended warranty covers losses arising from the need to replace / repair faulty parts in a product beyond the manufacturer’s normal warranty period. Such policies may have a term of several years. The exposure measure is usually the number of appliances or appliance-years. The main rating factors include make / model of item, length of manufacturer’s guarantee and term of warranty.
Define Fidelity Guarantee Insurance
Fidelity guarantee covers the insured against financial losses caused by dishonest actions of employees. Contracts will be individually underwritten – the nature of the business and the size of the sums at risk will be taken into account.
