IF1 Chapter 8 Quiz

Contribution will only apply if six criteria are met. Which is NOT one of these?

• Common subject matter

• Common insurable interest

• Common peril

• Common policy conditions

An insured property is covered by two fire policies subject to identical terms and conditions. A claim is made for fire damage to the property that will cost £40,000 to repair. Policy A has a sum insured of £120,000 and policy B of £60,000. If there is no underinsurance, under the principle of contribution, how much of the claim can policy B expect to pay?

• £20,000

• £20,000

• £13,333

• £40,000

Nancy has had a claim settled on her insurance policy. If her insurer has no rights of subrogation, this is most likely to be:

• liability insurance

• personal accident insurance

• warranty insurance

• motor insurance

This insurance principle allows insurers to recover payment from a third party responsible for a loss on a policy. What is it known as?

• Contribution

• Proximate cause

• Indemnity

• Subrogation

Maxine has contents insurance which includes 'all risks' worldwide cover. She also has travel insurance that covers her belongings. If she has a claim that is subject to a contribution condition, this is most likely because she has:

• had her camera stolen

• required medical assistance

• claimed the reimbursement of holiday costs due to cancellation

• been repatriated home due to sickness

In settling an insurance claim, contribution will occur where:

• a pro rata payment is made by the insurer.

• there is a dispute and the insured is asked to make a payment.

• there is underinsurance and the insured is asked to make up an underpayment of premium.

• there are two or more insurers liable for the same risk.

Why does an insurer typically include a contribution clause within a policy wording?

• To ensure any claim is only paid where the policyholder's premium payments are up to date.

• To restrict its liability to a share of the loss where there is more than one insurer.

• It enables the insurer to reduce the amount of claim paid in the event of underinsurance.

• It enables the insurer to require the policyholder to pay a proportion of the claim.

Under common law, tort is the duty of everyone to:

• act in a reasonable way towards others.

• share information when requested.

• act within the law.

• protect themselves.