Advanced General Insurance Principles Flashcards
6 cards from real PGI practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Advanced General Insurance Principles flashcards as text
What is 'loss of profits' (business interruption) indemnity period and why does its length matter?
Answer: The maximum period over which BI benefits are paid following insured damage; it must be long enough to cover the time needed to fully restore business to pre-loss levels
The indemnity period is the maximum time the insurer pays BI losses following physical damage. It should cover not just physical reconstruction but also the time to rebuild customer relationships and restore full revenue — often 24-36 months for complex businesses.
What is 'advance loss of profits' (ALOP) insurance in major project contexts?
Answer: Coverage for loss of anticipated profits or revenue during the delay period caused by insured damage before a project commences commercial operations
ALOP (also called Delay in Start-Up or DSU) covers financial losses — typically lost revenue and ongoing financing costs — arising from delays to a project's planned commercial start date caused by an insured physical damage event during construction.
What does 'sue and labour' clause mean in marine insurance?
Answer: A clause requiring the insured to take reasonable steps to prevent or minimise a loss, for which the insurer will reimburse reasonable expenses incurred
The sue and labour clause obliges the insured to take all reasonable measures to avert or minimise a loss when it is imminent or has occurred. The insurer reimburses reasonable expenses incurred in doing so, in addition to the main claim.
What is 'cross-liability' clause in a liability policy covering multiple insured parties?
Answer: A clause treating each insured party as if they had a separate policy, so one insured can claim under the policy against another insured for an incident between them
A cross-liability clause treats each insured as if separately insured, allowing claims between co-insureds (e.g., between a contractor and project owner both named on a policy) to be covered under the same policy without the insurer taking a cross-claim defence.
What is 'first loss' coverage in property insurance?
Answer: Coverage where the insurer pays losses up to a specified limit that is less than the full property value, with no average clause applying
First loss coverage insures up to a specified limit that is intentionally less than the full property value (used when total loss is considered impossible), with the understanding that the average clause does not apply. The premium is calculated on the first loss limit.
What is 'material damage warranty' in a business interruption policy?
Answer: A requirement that the BI policy is triggered only if there is first a valid material damage claim under the property policy covering the same premises
The material damage warranty requires that a BI claim is only valid if there is also an insured physical damage loss under the linked property policy. It prevents BI coverage from responding to purely financial or non-physical causes of business interruption.