Insurance Products: Personal Chapter 5 Insurance Products: Personal 3 questions = 4% of the exam

Learning Objectives: After studying this chapter, you should be able to: Describe the basic features and typical policy cover of the insurance types detailed Explain the underwriting approach and considerations for various classes of insurance

Motor Insurance Road Traffic Act Only - The minimum to comply with the Road Traffic Act 1988: Unlimited cover for death and bodily injury £1,200,000, for loss or damage to third party property Claimants costs and expenses Emergency medical treatment/hospital charges. Third EU Motor Insurance Directive says policies must: Provide the minimum cover in European country your traveling to. Cover liability to persons in employment of the insured when travelling as passengers

Private Car Insurance Third Party Only RTA Only + ... Covers vehicle off the road £20,000,000 for third party property damage Driving other cars (Insurer dependant) Passenger indemnity Claim defence legal costs Exclusions…

Private Car Insurance Third Party, Fire and Theft TPO + ... Damage caused by fire, lightning or explosion to the insured’s vehicle Attempted theft or theft (may include T.W.O.C) Stolen and not recovered Exclusions…

Private Car Insurance Comprehensive TPFT + ... Accidental and malicious damage to the insured’s vehicle Windscreen – does not affect No Claim Discount (NCD) Exclusions… Comprehensive cover typically includes: Personal Accident cover Medical Expenses Personal Belongings/Clothing

Extensions Breakage Of Glass Personal Belongings and Clothing Young Additional Drivers Loss of Use Personal Accident Benefit Foreign Use Elections Racing, Competition, Rallies and Trails Caravans and Trailers Breakdown Cover Joint Policies

Exclusions

Usual market exclusions Contractual liabilities Riot and civil commotion – outside UK Cover subject to valid driving license

Motor Cycle Insurance Basic Features Still subject to RTA 1988 Levels of cover the same Specified motor cycle insurance Comprehensive cover - 3 differences Spare parts/accessories only covered if bike is stolen No PA , medical expenses, personal effects Liability section only covers insured and permitted drivers

Possible extensions Towing a Trailer Multiple Bikes Driving Other Cycles Multiple Bikes Invalid Carriages

Commercial Motor Insurance Basic Features: Good carrying Passenger carrying Agricultural and forestry Special construction Always remember the goods carried by the vehicle are NOT covered, the customer would require Goods in Transit Insurance.

Commercial Motor Insurance Third Party Liability Loss or Damage to the Vehicle Trailers What's different to private motor

Loading and unloading Cover for TP liabilities can be provided for accidents whilst loading or unloading Indemnity to driver Usually anyone may drive with the owner’s permission Indemnity to user The insured may allow others to use the vehicle for SD&P use Indemnity to passengers Indemnity for passengers acts of negligence Legal costs The policy can be extended to cover legal costs

Optional Extensions Third Party Property Damage Medical Expenses/Personal Accident Benefits Personal Belongings and Clothing Windscreen/Glass Cover Indemnity to Hirers Indemnity to Principal Carnivals Sheets and Ropes etc. Loss of Use Contingent Third Party Occasional Business Use

Other Fleet insurance Contingent liability Occasional business use Roadside assistance

Joseph has a comprehensive private car policy Joseph has a comprehensive private car policy. Which of the following is not covered under the policy? Tyre damage from driving over a nail in the road. Windscreen damage caused by a stone on the motorway. Damaged door lock and driver's door caused by attempted theft of vehicle whilst parked overnight. Damaged car door and bumper caused in a supermarket car park by an unknown motorist.

Which policy covers damage to goods carried in a commercial vehicle? a. A marine policy. b. Goods in transit policy. c. A motor fleet policy. d. A commercial vehicle policy.

To comply with legal requirements, what limit of cover must be provided for causing injury or death to a third party ? a. £1m b. £1.2m c. £20m d. Unlimited

Three types of health Insurance Personal Accident Sickness Medical Expenses Private or group policies

Personal Accident and Sickness Accident covers… Accidental death and bodily injury. Death and Permanent disability = Lump sum payment Temporary disability = Weekly payment (104 weeks)

Personal Accident and Sickness Sickness covers… If you are unable to work due to sickness or disease. Usually paid weekly (104 weeks) Usually a time franchise applies e.g. 7 days Usually excludes cover for the first 21 days – waiting period

Policy Benefits Death Loss of sight Loss of limb Permanent Total Disability Permanent Partial Disability Temporary Total Disability Temporary Partial Disability Medical Expenses Payment of benefits Permanent = Lump sum Temporary = Weekly amount Total = Full payment Partial = Reduced payment

Highest capital benefit is for death Continental scale Highest capital benefit is for death All other benefits expressed as a percentage For example: Loss of finger is 20% of death benefit

Exclusions Being under the influence of drugs/alcohol Self-inflicted injuries Pre-existing medical conditions Aviation (unless a fare paying passenger) and hazardous activities Childbirth, pregnancy, venereal diseases and AIDS War (all market exclusions) Sickness within the first 21 days

Medical Expenses Insurance Basic Features… Private medical treatment outside the NHS Standard policy cover: In-patient cover provides… Hospital Charges Specialist Fees Additional Costs Limitations: Pre-existing conditions and Long-term Care = NOT COVERED!

Which of these types of insurance is not a health product? a. Medical expenses. b. Whole life. c. Sickness. d. Personal accident.

Which type of policy bases one of its benefits on a continental scale? a. Medical expenses. b. Travel insurance. c. Sickness. d. Personal accident.

Aaron loses a finger in an accident Aaron loses a finger in an accident. Under the permanent partial disablement benefit in his personal accident policy, what percentage of the death benefit will he be paid? a. 50%. b. 10%. c. 20%. d. 30%.

Household Insurance Basic features… Covers buildings and/or contents Two options for settlement: INDEMNITY (or market value) NEW FOR OLD (or reinstatement) Deduction for wear and tear Full cost to replace item as NEW

Buildings Insurance Fire, Lightning, Non-Automatic explosion and earthquake Non-Automatic Extension Riot, civil commotion, malicious damage or vandalism Loss of Rent Storm or Flood Legal Fees and Debris Removal Falling Trees or Branches Accidental Breakage of Glass and Sanitary Ware Escape of Water Escape of Oil Accidental Damage to Drains, Pipes and Cables Theft or Attempted theft Breakage or Collapse of Aerials Impact Subsidence, Ground Heave and Landslip

Vs Buildings Contents Contents Cover “If you were to tip your house upside down, everything that falls out is contents” Differences between Buildings and Contents: Theft Cover – Forcible and Violent, Entry or Exit Accidental Damage – In exchange for an AP

1/3 of total contents sum insured. Contents Cover Single Article limits and Valuable limits… Single article limits Valuable limits Each individual valuable must not be worth more than 5% of the total contents sum insured. 1/3 of total contents sum insured.

Contents Cover Extensions Non-Automatic Extensions Temporary Removal Clothing and Personal Goods of Domestic Staff Accidental Breakage Loss of Rent Non-Automatic Extensions Accidental Damage to Entertainment Equipment Accidental Damage Whilst in Course of Removal Other Policy Extensions

Contents Cover Specific Exclusions…

Legal Liability (buildings and contents) Covers liabilities that arise from: Buildings owned or previously owned Defective Premises Act 1972 Contents: Covers liabilities that arise as a: Occupier rather than owner Private individual Employer of domestic staff Common policy limit is £2 million per claim.

PA, Hospital cash plan, Creditor Optional Extensions All risks Identity fraud Money & Credit cards Legal expenses Bicycles Domestic animals Freezer contents PA, Hospital cash plan, Creditor Caravans Sports equipment Small craft

Limitations – Buildings & Contents

Flood:re Why was it set up??? Properties not covered: Businesses Large blocks of flats Band H council tax houses Houses Built after 01/01/2009

What is the definition of a small craft which can be insured under an extension to a standard household policy? Vessels not exceeding 17 feet overall and with design speeds not exceeding 20 knots. Vessels not exceeding 16 feet overall and with design speeds not exceeding 17 knots. Vessels not exceeding £35,000 replacement cost. Vessels not exceeding £25,000 replacement cost.

Flood Re is designed to offer flood cover for: a. large businesses. b. Council tax band A to G properties. c. household properties built after 2009. d. small businesses.

Travel Insurance No standard policy wording! Typical policy cover… Personal Accident Travel Delay Medical Expenses Travel Interruption Loss of Deposit Hospital Cash Benefit Baggage/Personal Effects Delayed Baggage Personal Liability

Travel Insurance Optional Extensions… Failure of Tour Organiser Lack of Services/Amenities Loss of Passport Legal Expenses

Limitations – Travel Insurance

Extended Warranties What is the difference between a manufacturers warranty and an extended warranty ??? Free repairs following electrical and mechanical defects for up to 5 years Covers replacement parts and/or labour If beyond repair within first five years, some insurers will replace it with nearest model

Extended Warranties Repairs must be carried out by a supplier of the equipment Exclusions: Failure to comply with manufacturer’s instructions, or negligent handling Risks normally covered by a household contents policy War etc. Costs of bulbs, aerials, external wires, knobs, handles, driving belts etc.

Some insurance policies are known as benefit policies Some insurance policies are known as benefit policies. Which of the following is a benefit policy? a. Private car. b. Commercial all risks. c. Business interruption. d. Personal accident.

There are several features of extended warranty insurance There are several features of extended warranty insurance. Which of the following is NOT one of these? Repairs must be carried out by the insurer's recommended repairer. Risks normally covered by a household contents policy are excluded. A typical sum insured is approximately £2,500. Policies are available to cover all an insured’s electrical products.