Package and Property Policies

Question 1

What are the two options for settlement of household claims?

Answer 1

Indemnity (or market value) - A deduction is made for wear and tear. The amount paid is that required to replace the item with a replacement of the same age and in the same condition. Nowadays this option is rarely chosen. Some insurers do not even offer it as an option.
New for old (or reinstatement) - The full cost of replacing the item as new is paid. Most insurers make a deduction for wear and tear in certain circumstances: such as claims for clothing and household linen. A deduction may also be made if the sum insured is inadequate or for property over a certain age (such as more than five years-old).

Question 2

What perils are covered in respect of buildings?

Answer 2

Fire, lightning, explosion and earthquake
Riot, civil commotion, strikes, labour or political disturbances, malicious damage or vandalism
Storm or flood
Falling trees or branches
Escape of water
Escape of oil
Theft or attempted theft
Impact/collision
Subsidence, ground heave or landslip
Accidental damage to drains, pipes, cables or underground pipes
Accidental breakage of glass and sanitary fixtures
Legal fees, architects’ and surveyors’ fees, cost of debris removal
Loss of rent
Accidental damage extension

Question 3

Give a definition of Buildings

Answer 3

Buildings, in respect of household insurance, may be defined as the main structure of the private dwelling (house etc.) and this includes garages, sheds, greenhouses and other outbuildings. Swimming pools and tennis courts are also included as are walls, gates, fences and paths.

Question 4

Give a definition of contents

Answer 4

Contents, in respect of household insurance, may be defined as household goods and personal effects belonging to the insured or a family member living in the property. This includes cash and stamps (not part of a stamp collection) up to, say, £500 in total and any fixtures and fittings belonging to the insured are also covered. The schedule attached to the policy will usually show the applicable limits.

Question 5

Which elements of cover are usually included automatically within the contents section and are not subject to any additional premium?

Answer 5

Temporary removal. 
Clothing and personal effects. 
Accidental breakage. 
Loss of rent. 
Home Office Equipment.

Question 6

What are the typical exclusions to the contents policy?

Answer 6

property more specifically insured under another policy;
deeds, bonds, bills of exchange, promissory notes, cheques, securities, documents and manuscripts;
medals and coins, unless specifically insured;
motor vehicles; and
livestock (other than horses).

Question 7

What specific liability cover forms part of the buildings policy?

Answer 7

Liability incurred by the insured as owner of the property and liability incurred under the Defective Premises Act 1972 (or the Defective Premises (Northern Ireland) Order 1975) for faults in property formerly owned and occupied by the insured.

Question 8

What specific liability cover forms part of the contents policy?

Answer 8

Cover to protect the interest of the insured as:

• an occupier, rather than owner, of the property. i.e. it covers liability incurred as occupier of the property or any other premises used for temporary holiday accommodation;
• a private individual for personal liability, in other words, the liability does not need to be linked to the occupation of property; and
• an employer of domestic employees.

Question 9

Name some of the optional extensions available on the household policy

Answer 9

Personal possessions
Money and credit cards
Bicycles
Freezer contents
Caravans
Small craft
Sports equipment
Personal accident, hospital cash benefit and creditor insurance
Domestic animals
Legal expenses
Identity fraud

Question 10

What are the basic sections of cover under Travel Insurance

Answer 10

Personal accident benefits
Medical and associated expenses
Loss of deposits
Baggage, personal effects and money
Personal liability
Delayed baggage
Hospital cash benefits
Travel interruption
Travel delay

Question 11

What are the optional extensions to Travel Insurance

Answer 11

Failure of tour organiser
Lack of services or amenities
Loss of passport
Legal expenses

Question 12

What are the general exclusions to Travel insurance

Answer 12

Death, bodily injury or sickness caused by un-prescribed drugs or intoxicants; due to insanity, pregnancy or childbirth; consequent upon any physical or mental defect; while taking part in certain hazardous activities; or as a result of suicide or self-inflicted injury.
Loss of luggage caused by confiscation; stamps, manuscripts, documents; camping equipment; cash/cheques unless reported to the police within 24 hours.>
Damage to fragile objects.
Terrorism is a standard exclusion, although it may not apply to claims made for emergency medical expenses and under personal accident sections, providing the disturbances were not taking place at the start of the insured trip. It is important to ensure that any country it is planned to visit, whether on business or pleasure, is validated as safe to visit by the Foreign and Commonwealth Office (FCO).

Question 13

What risks are covered under a standard commercial property policy?

Answer 13

Fire and additional perils
Business interruption
Theft
Money
Glass
Assault
Goods in transit
Employers’ liability
Public liability
Product liability

Question 14

What optional extensions are available on a standard commercial property policy?

Answer 14

Refrigerated stock
Business ‘all risks’
Legal expenses

Question 15

What optional extensions specifically for Data privacy and cyber risks are available on a standard commercial property policy?

Answer 15

Cyber liability
Data breach expenses
Computer system damage, data, extra cost and business income
Cyber crime

Question 16

What optional extensions are available on a standard property fire policy?

Answer 16

Perils of a chemical type - explosion, spontaneous fermentation or heating
Social perils - riot, civil commotion, strikers, locked-out workers, persons taking part in labour disturbances, malicious persons
Perils of nature - storm, flood, earthquake, subterranean fire, subsidence, ground heave, landslip
Miscellaneous perils - escape of water, aircraft, impact

Question 17

Under a theft policy entry by what means is not covered?

Answer 17

A more restricted theft wording does not cover entry into the premises by:
• a key;
• a trick; or
• hiding on the premises while it is open for business.

Question 18

Average will apply to theft policies unless the insurance is on what basis?

Answer 18

‘First loss’ basis.

Question 19

What are the common extensions to a theft policy?

Answer 19

Breakage of glass
Replacement of locks
Temporary removal
Index linking

Question 20

What extensions to a theft policy will be subject to careful underwriting and, usually, an additional premium?

Answer 20

Collusion
Extended or full theft
Robbery and aggravated burglary

Question 21

Money insurance is on an ‘all risks’ basis, covering all risks of loss or destruction of or damage to money in different situations. What situations are covered under a money policy?

Answer 21

In transit or being carried by the insured or their employees.
On the insured’s premises during business hours.
In a bank night safe.
In a locked safe or strongroom out of business hours (for large amounts, insurers will wish to approve the safe).
On the insured’s premises out of business hours and not in a safe, but usually with a low limit, say £500.
In the private residence of any principal or employee of an insured company (again, with a low limit).
In the custody of collectors or travellers while in transit, usually with a time limit, say within 24 hours of collection.
In the custody of a professional carrier or security company.

Question 22

What are the general exclusions to a money policy?

Answer 22

loss due to an error or omission in accounting/counting/book-keeping;
loss due to the dishonesty of an employee, not discovered within seven days;
loss, destruction or damage arising outside Great Britain, Northern Ireland, the Isle of Man or the Channel Islands; and
loss resulting from the safe or strongroom being opened by a key or by using the combination to a safe where this has been left on the insured’s premises while closed for business.