BCP Claims Handling 2 — Questions and Answers
Question 1: What does 'ex gratia' payment mean in insurance claims?
- Payment made as a legal obligation under the policy
- Payment made as a goodwill gesture without admission of liability under the policy (Correct answer)
- Payment made only after court order
- Payment of the full sum insured automatically
Correct answer: Payment made as a goodwill gesture without admission of liability under the policy
An ex gratia payment is made by the insurer as a goodwill gesture without any admission that the policy legally covers the claim. It is discretionary and does not set a precedent.
Question 2: In motor accident claims in Singapore, what is the purpose of the 'Motor Claims Framework'?
- To set maximum repair costs for all vehicles
- To streamline the motor claims process, reduce fraudulent claims, and ensure fair settlement (Correct answer)
- To eliminate the need for motor insurance entirely
- To require all claims to go through court
Correct answer: To streamline the motor claims process, reduce fraudulent claims, and ensure fair settlement
Singapore's Motor Claims Framework (MCF) streamlines the claims process, combats fraud, promotes fair settlement, and requires policyholders to report accidents and bring vehicles to authorized workshops.
Question 3: What is 'subrogation' and when does it arise in a property insurance claim?
- Before the claim is paid, the insurer investigates the cause
- After paying the insured's claim, the insurer takes over the insured's right to recover from the responsible third party (Correct answer)
- When the insured disagrees with the settlement amount
- When coverage is disputed
Correct answer: After paying the insured's claim, the insurer takes over the insured's right to recover from the responsible third party
Subrogation arises after the insurer has paid the claim. The insurer then steps into the insured's shoes and has the right to recover the claim amount from any third party legally responsible for the loss.
Question 4: What is a 'reservation of rights' letter in insurance claims?
- A letter from the insured reserving the right to appeal
- A letter from the insurer notifying that it is investigating a claim while reserving the right to deny coverage (Correct answer)
- A letter requesting additional premiums
- A legal court document
Correct answer: A letter from the insurer notifying that it is investigating a claim while reserving the right to deny coverage
A reservation of rights letter allows the insurer to investigate and potentially defend a claim while preserving the right to deny coverage if an exclusion or coverage issue is later confirmed.
Question 5: What does 'appointed repairer' mean in motor insurance claims in Singapore?
- A repairer appointed by the vehicle manufacturer
- A workshop appointed by the insurer that the policyholder must use to qualify for full claim benefits (Correct answer)
- Any repairer chosen by the policyholder
- A government-certified vehicle repairer
Correct answer: A workshop appointed by the insurer that the policyholder must use to qualify for full claim benefits
In Singapore motor insurance, an 'appointed repairer' is a workshop within the insurer's network. Using an appointed repairer typically ensures the claim is processed smoothly and the policyholder receives full benefits.
Question 6: What is the standard limitation period for bringing a claim under a general insurance policy in Singapore?
- 1 year from the date of loss
- 6 years from the date of the cause of action under the Limitation Act (Correct answer)
- 3 years from the date of policy issuance
- 10 years from the date of policy inception
Correct answer: 6 years from the date of the cause of action under the Limitation Act
Under Singapore's Limitation Act, the standard limitation period for contract-based claims (including insurance policies) is 6 years from the date the cause of action arose — typically the date of the insured loss.
BCP Claims Handling 2
What does 'ex gratia' payment mean in insurance claims?