Insurance Contracts & Underwriting Flashcards
6 cards from real BCP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Insurance Contracts & Underwriting flashcards as text
What does 'policy schedule' contain in a typical general insurance policy?
Answer: Specific details of the individual policy: insured's name, property description, sum insured, premium, and period
The policy schedule contains the specific details of the individual policy — insured's name and address, property/risk description, sum insured, premium amount, policy period, and any specific endorsements.
What is meant by 'agreed market value' in a motor insurance context?
Answer: The vehicle's value agreed between insurer and insured, used to settle total loss claims
Agreed market value in motor insurance is the value of the vehicle agreed between the insurer and insured at inception. In a total loss, this agreed value is paid without further negotiation about the vehicle's actual value.
What does 'basis of settlement' in a property policy determine?
Answer: The method by which claim payments are calculated — e.g., indemnity, reinstatement, or agreed value
The basis of settlement specifies how claim payments are calculated. Common bases include indemnity (depreciated value), reinstatement (new for old), or agreed value (pre-agreed sum for total loss).
What is 'long-tail liability' in insurance underwriting?
Answer: Insurance where claims may emerge or be settled many years after the original policy period, creating extended uncertainty
Long-tail liability refers to liability insurance classes (e.g., professional indemnity, product liability) where claims can emerge and be settled many years after the policy period, making reserving and pricing challenging.
What is a 'declaration policy' used for in property insurance?
Answer: A policy where the sum insured is adjusted based on periodic declarations of stock or property values
A declaration policy allows the insured to declare fluctuating values (typically stock) periodically. The premium is calculated based on actual declared values, preventing both over and underinsurance.
What is the significance of the 'inception date' versus 'effective date' in an insurance policy?
Answer: Inception date is when the policy was first issued; effective date may differ if coverage is backdated or starts on a different date
The inception date is when the policy comes into existence as a contract, while the effective date is when coverage actually begins. These can differ — for example, if a policy is issued today but coverage is backdated or starts in the future.