Insurance Claims Handling and Procedure

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Questions and Answers

What responsibility does the insured have regarding proof of loss?

The insured can delegate proof of loss to their legal representative.

The insured must provide full particulars and proof of loss. (correct)

The insured does not need to prove the loss if the insurer already has records.

The insured must only notify the insurer of a claim.

What is the typical notification period for the policyholder to inform the insurer about a possible claim?

60 days

10 days

90 days

30 days (correct)

What could reduce the chances of recovery from a negligent party?

Not notifying the insurer promptly of the claim. (correct)

Filing a claim in a prescribed manner.

Providing proof of loss within 30 days.

Cooperating fully with the insurance investigation.

According to the Insurance Act 2001, what is the timeframe in which an insurer must issue a payment after receiving a duly executed discharge?

30 days Signup and view all the answers

What are the purposes of the Claim for Notice of Accident Form?

To establish liability and legal obligations. Signup and view all the answers

What is a critical aspect of handling claims according to insurers?

Investigations must be thorough and impartial. Signup and view all the answers

What should an insurer do once liability has been established after a claims investigation?

Issue payment immediately. Signup and view all the answers

Why is a good claims service crucial for an insurer's reputation?

It affects the insured's confidence and satisfaction. Signup and view all the answers

What is required for an insurer to process a claim for damage to an insured vehicle?

The cover in force must include Third Party Fire & Theft or Comprehensive. Signup and view all the answers

What is the primary purpose of the police report in an accident claim?

To provide supplementary information needed to handle the claim. Signup and view all the answers

Which of the following statements about Total Loss is true?

Total Loss occurs when repair costs are equivalent to or more than the market value. Signup and view all the answers

What is the recommended action in the event of a theft claim?

Notify the police immediately about the theft. Signup and view all the answers

Which of the following is NOT a responsibility of assessors during the claims process?

Approve repairs directly. Signup and view all the answers

Which claim payment method allows for the most flexibility for insurers?

All of the above are equally flexible. Signup and view all the answers

What determines the amount a policyholder has to pay out of pocket during a claim?

The applicable Excess or deductible. Signup and view all the answers

Which of the following is true regarding claims involving third party personal injuries?

They tend to be the largest claims. Signup and view all the answers

What must a policyholder do upon an accident likely to result in a claim?

Immediately notify the insurer of the accident Signup and view all the answers

What should a policyholder avoid doing without the insurer's consent?

Admitting liability to anyone Signup and view all the answers

In the case of theft or malicious damage, what is the first step the policyholder should take?

Notify the police immediately Signup and view all the answers

What does subrogation allow the insurer to do?

Negotiate on behalf of the policyholder with third parties Signup and view all the answers

What is the primary purpose of arbitration in the claims process?

To resolve disputes regarding claim amounts Signup and view all the answers

If a policyholder has multiple policies covering the same risk, what does the contribution condition entail?

The insurer pays a proportionate share of the claim based on each policy limit Signup and view all the answers

What happens if there is a disagreement about the claim amount after it has been accepted?

It is referred to an arbitrator for resolution Signup and view all the answers

What is the impact of the limit of indemnity clause in the event of an accident involving multiple parties?

The insurer will pay only the total agreed amount in the policy Signup and view all the answers

Study Notes

Claims Handling

A key factor in insurance company reputation is their claims handling process
Delayed or withheld payments damage the insurer's reputation
Prompt notification of potential claims is important to the insurer, allowing investigations and potentially recovering from a negligent party
Policyholders need to notify insurers of claims within a stipulated time period (usually 30 days)
The insured is responsible for proving the loss occurred due to an insured peril

Claims Procedure

Insurers use claim forms to determine liability and legal responsibility
Police reports are crucial when police are involved in accidents
Third-party personal injury claims are complex and difficult to assess due to subjective factors such as pain and suffering
Investigations are thorough and without prejudice, aiming for a balance between speed and accuracy
Insurers are required to pay claims within 30 days after receiving a properly executed discharge

Additional Claims Considerations

Fire claims may prompt investigations into the insured's background to detect potential fraud
Theft claims require immediate notification to the police
Recovered stolen vehicles become the property of the insurer, who may return them to the insured in exchange for the claim payment
Total loss occurs when repair costs exceed the vehicle's market value

Assessments

Assessors are independent professionals or companies contracted by insurers to evaluate claims, excluding the smallest ones
Assessing involves inspecting damaged vehicles, reviewing repair estimates for accuracy and depreciation, estimating repair time for loss of use claims, and verifying part availability
Assessors recommend approval for repairs, they don't usually authorize them directly

Own Damage Claims

Insurers cover own damage claims under Third Party Fire & Theft or Comprehensive policies
Claims exceeding the policy excess are admissible
Insurers have options for indemnity: repair, replacement, or cash payout, within policy limits

Excess/Deductible

The insured bears a portion of the loss, usually a percentage of the sum insured, referred to as the excess or deductible

Under-insurance and Salvage

In total loss cases, the insured receives any assessed value exceeding the policy sum insured, minus the excess, including any salvage value

Policy Conditions Governing Claims

Policyholders are responsible for promptly notifying insurers of accidents and claims made against them, as well as legal proceedings, and must provide requested information and documents
Policyholders shouldn't admit liability without insurer consent
Theft or malicious damage incidents require immediate police notification

Contribution

If multiple policies cover the same risk, insurers share the cost of the loss proportionally
Personal accident benefits are not indemnities and are excluded from the contribution condition

Subrogation

This condition allows insurers to negotiate and recover from third parties on behalf of the policyholder to minimize their expenses
Policyholders must cooperate and refrain from handling claims independently

Arbitration

Disputes about claim amounts (especially total loss vehicle valuations) are referred to an independent arbitrator before legal action
A binding arbitration award must be issued before legal proceedings can begin against insurers

Limit of Indemnity

This clause ensures that insurers won't exceed the policy limits, even if multiple parties are entitled to indemnity in an accident

Inter-Company Claims Agreement

Agreements facilitating claim handling between insurers to reduce costs

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Description

This quiz examines the essential aspects of claims handling and procedures in the insurance industry. It covers the impact of timely notifications, responsibilities of policyholders, and the importance of documentation like police reports. Test your knowledge on how insurance companies manage claims to maintain their reputation.