General Insurance Principles Flashcards

What is the difference between a 'condition' and a 'warranty' in an insurance policy?

Answer: Breach of warranty automatically voids the policy; breach of condition gives the insurer the right to repudiate

Breach of warranty automatically voids the policy from the date of breach regardless of whether it contributed to the loss. Breach of condition gives the insurer the right to repudiate the specific claim affected.

What is 'inception date' in an insurance policy?

Answer: The date the insurance coverage begins

The inception date is the date on which insurance coverage commences — when the risk transfers to the insurer and the policy becomes effective.

Which document provides temporary insurance coverage before the formal policy is issued?

Answer: Cover note

A cover note provides temporary insurance coverage for a specified period while the formal policy is being prepared and issued. It is legally binding and constitutes proof of insurance.

What is 'excess of loss' reinsurance?

Answer: When a reinsurer pays the amount of loss exceeding the cedant's retention limit

Excess of loss reinsurance is where the reinsurer pays the amount of loss exceeding the cedant insurer's retention (the retention limit), up to the reinsurance limit agreed.

What does 'floater policy' mean in property insurance?

Answer: A policy covering specific items wherever they are located

A floater policy covers movable property wherever it is located, providing coverage for items that move from place to place, not just at a fixed location.

What is meant by 'all risks' coverage in general insurance?

Answer: Coverage for all perils except those specifically excluded in the policy

'All risks' coverage covers loss or damage from any cause except those specifically excluded in the policy. It is broader than named perils coverage but still has exclusions.