PGI Liability Insurance 2 — Questions and Answers
Question 1: What is 'cyber liability' insurance and why is it growing in Singapore?
- Insurance for computer hardware
- Insurance covering data breaches, cyberattacks, ransomware, and associated costs including legal liability, notification costs, and business interruption (Correct answer)
- Insurance for social media accounts
- Insurance for internet service providers only
Correct answer: Insurance covering data breaches, cyberattacks, ransomware, and associated costs including legal liability, notification costs, and business interruption
With Singapore's digital economy growth and strict PDPA requirements, cyber liability insurance covers costs from data breaches, including notification expenses, legal defence, regulatory fines, and business disruption.
Question 2: What is 'fidelity guarantee' insurance in Singapore?
- Insurance for marriage
- Insurance protecting businesses against financial loss caused by dishonest or fraudulent acts of their employees (Correct answer)
- Insurance for brand loyalty
- Insurance for investment returns
Correct answer: Insurance protecting businesses against financial loss caused by dishonest or fraudulent acts of their employees
Fidelity guarantee insurance compensates businesses for direct financial loss resulting from employee dishonesty — theft, fraud, embezzlement, or misappropriation of funds.
Question 3: What does 'third-party' mean in liability insurance terminology?
- A three-person company
- Any person or entity other than the insured and the insurer who suffers loss or damage due to the insured's actions (Correct answer)
- The insurance agent
- A government authority
Correct answer: Any person or entity other than the insured and the insurer who suffers loss or damage due to the insured's actions
In liability insurance: the first party is the insured (policyholder), the second party is the insurer (insurance company), and the third party is anyone else who may have a claim against the insured.
Question 4: What is 'claims-made' vs 'occurrence-based' liability insurance?
- They are the same thing
- Claims-made covers claims reported during the policy period regardless of when the event occurred; occurrence-based covers events during the policy period regardless of when claims are filed (Correct answer)
- Claims-made is always cheaper
- Occurrence-based has no time limits
Correct answer: Claims-made covers claims reported during the policy period regardless of when the event occurred; occurrence-based covers events during the policy period regardless of when claims are filed
Occurrence-based policies cover incidents that happen during the policy period, no matter when the claim is filed. Claims-made policies cover claims reported during the policy period, regardless of when the incident occurred (subject to retroactive date).
Question 5: What is the significance of 'aggregate limit' in liability insurance?
- The most you can claim per incident
- The maximum total amount the insurer will pay for all claims combined during the policy period (Correct answer)
- The minimum claim amount
- The premium amount
Correct answer: The maximum total amount the insurer will pay for all claims combined during the policy period
The aggregate limit caps the total payout for all claims during the policy period. Once this limit is reached, no further claims are covered. This is separate from the per-occurrence limit.
Question 6: What is 'subrogation' in the context of Singapore general insurance?
- Cancelling a policy
- The insurer's right to pursue a third party responsible for the loss after paying the insured's claim, to recover the amount paid (Correct answer)
- Transferring a policy to another person
- Adding a rider to a policy
Correct answer: The insurer's right to pursue a third party responsible for the loss after paying the insured's claim, to recover the amount paid
After paying a claim, the insurer can 'step into the shoes' of the insured and pursue the responsible third party to recover the costs. This prevents the insured from being compensated twice.
PGI Liability Insurance 2
What is 'cyber liability' insurance and why is it growing in Singapore?