Chapter 5 Claims settlement Flashcards
(23 cards)
In what 4 circumstances might an insurer refuse to pay a claim?
- Cover was never in force
- Breach of a relevant warranty
- Breach of a policy condition
- Fraud
What are partially met claims?
Where a claim is valid but some terms and conditions mean that the full value claim settlement is not made.
How would you calculate a claim under the pro rata average condition?
Sum insured / value of property at risk x loss
What is a deductible and why is it used?
A deductible is a large excess.
An insured (usually a large commercial concern) may wish to limit its cover to large claims and be its own insurer for smaller claims.
What is a franchise?
An excess where claims are paid in full once the claim exceeds a specific threshold.
How are claims settlements made?
- Payment of money [liability, personal accident and pecuniary insurance (e.g. business interruption) claims].
- Paying repairs (Motor Insurance claims)
- Replacement (Glass Insurance claims, some home contents claims)
- Reinstatement (sometimes property)
In what situations might ex-gratia payments be made?
- where an exclusion is a borderline one
- where there is a genuine oversight by the insured (such as an administrative error)
- where hardship would be created
- to preserve good business relationships.
What are the key features of the ABI Memorandum of Understanding - Subrogated Motor Claims?
- consistency in authorising repair costs, regardless of whether recovery is likely
- claims must represent the net costs to the insurer
- supporting documentation should be volunteered
- legal costs should be avoided, with proper notice being given of any intended proceedings.
What is RIPE (Reduction in Paper Exchange)?
An agreement in respect of motor vehicle damage claims where repair documentation does not need to be provided, with each insurer trusting the other.
What is the purpose of the ABI Personal Effects Contribution Agreement?
- avoid adverse publicity for insurers
- avoid costly and unnecessary handling of small contribution payments
- set rules for contribution between participating insurers
Deals with Claims for the loss of personal effects covered by two or more policies. (Applies regardless of any policy provisions)
What does the ABI Personal Effects Agreement cover?
- Motor accidents/thefts
- Specified items
- All other circumstances (amount over £125 and the other policy is not a motor policy)
- No claims discount
What does MIB stand for and what is its purpose?
Motor Insurers Bureau (Established 1946)
Administer a central compensation fund for innocent parties unable to recover compensation following a road accident.
If a motor insurer pays a third party claim even though the insurer has breached a policy condition as it is required under the Road Traffic Act what will they be called?
RTA insurer
If an insurer pays a third party claim as they are required to as the last insurer even though they could have avoided the policy for non disclosure they will eb known as?
Article 75 Insurer
What is the maximum that the MIB will pay under the MIB Uninsured Drivers Agreement for property damage if property damage is caused by an uninsured driver?
£1.2million
What must occur before the MIB pay claim for property damage under the MIB Untraced Drivers Agreement
Significant personal injury
What is the excess under the MIB Untraced Drivers Agreement for property damage
£400
What is a surge event
An event such as a flood when insurers receive many claims at once
What is a surge event
An event such as a flood when insurers receive many claims at once
Identify two actions an insurer may take in the event of a surge event.
Contact customers in the area
Reduce claims evidence requirements
IF a factor is added to each claim rather than the whole case reserve it is known as?
Flag or factor reserving
Identify four reasons why claim may only be partially met
Sum insured/limit not adequate
Average
Excess or deductible
Ex gratia payment
What is salvage
When an insurer pays a total loss but elements of the property are still intact
