Chapter 7 Flashcards
(45 cards)
Efficient Claims Process Benefits
• increased customer satisfaction
• leading customers to pay higher premiums for better service
Impacts of a Loss on a Commercial Customer
• loss of trading time
• potential harm to reputation
• need to rebuild customer base
Schedule of Location and Values
to specify insured locations within the territorial scope of the policy
Initial Actions of a Claims Handler
• instruct a loss adjuster
• set diary dates for updates
• consider an initial reserve
Investigations
• weather reports
• newspaper reports
• witness statements
• police / fire brigade reports
Reservation of Rights
when a claim is accepted for handling but may later be found not covered after further investigation
Leading example in Reservation of Rights and Estoppel
Kosmar Villa Holidays plc v Trustees of Syndicate 1243
Terms affecting Indemnity
• sum insured/policy limits
• excess/deductible
• average/underinsurance
• sub limits
First Loss in Commercial Insurance
a method where the sum insured is less than full property value, covering only anticipated losses
Different Excesses in Commercial Policies
separate excesses may apply to specific risks (e.g, fire, theft, storm) as a risk management measure
Time-Based Excess
an excess where claims are only payable if a loss exceeds a certain duration (e.g: 3 days in business interruption policies)
Difference between a Deductible and an Excess
deductibles often allow a premium discount and are typically used in the commercial market
Deductible Applications
it can be applied per location or over the whole policy with specific time periods, like 72 hours for weather events
Aggregate Deductible
an upper limit on the total deductible amount the policyholder pays in a year, usually four times the individual deductible
Working Excess
the self-insured amount a policyholder pays before submitting smaller claims, often managed by company budgets
Average Clause Formula
(Sum Insured / Value at Risk) x Amount of Loss = Insurer’s Liability
Loss Adjuster factors for Valuing Damaged Stock
• inspection of stock
• record verification
• purchase receipts
• salvage value
Claims Handler’s role in Valuing Losses
to review the loss adjuster’s findings and apply policy terms to determine an appropriate claim amount
Indemnity on Property
value at the date of the loss and at the place of the loss
no claim for:
• sentimental value
• consequential loss
Indemnity on Buildings
the cost of repair or reconstruction at the time of the loss less any deduction for betterment
Indemnity on Machinery and Equipment
the cost of repair less any deduction allowance for wear and tear
alternatively: the cost of replacement, less wear and tear
Indemnity on Manufacturers’ stock, raw material, work in progress and finished stock
the cost at the time of the loss of replacing the goods or returning them to their previous condition
Indemnity on Wholesale and Retail Stock
the cost at the time of the loss of replacing the stock, including transport
Indemnity on Farming Stock
livestock and produce - the local market price
stock produced for sale - market process less any savings made on processing, handling or transport
stock on farm consumption - cover replacement at market price plus transport costs
