CII IF8 cheat sheet

Utmost good faith (uberrimae fidei) is a reciprocal duty: the proposer must disclose material facts and the insurer must deal fairly, including prompt claims payment and clear policy wording.

A fact is material if it would influence a prudent underwriter's decision on acceptance, terms, or premium; the test is objective, not what the proposer personally thought relevant.

The duty of fair presentation under the Insurance Act 2015 requires a reasonable search for information, disclosure of material circumstances, and clarity on presentation; it applies to non-consumer contracts.

Innocent non-disclosure gives the insurer a proportionate remedy: the contract stands but the claim is reduced to what would have been payable had the truth been told.

Deliberate or reckless misrepresentation allows the insurer to avoid the contract, retain premium, and refuse all claims; dishonest claims are also a fraud offence.

Insurable interest must exist at inception for indemnity insurances and at the life insured's inception for life policies; absence renders the contract void.

Indemnity restores the insured to the pre-loss financial position; valued and new-for-old policies are exceptions, and average applies where sums insured are inadequate.

Subrogation transfers the insured's recovery rights against third parties to the insurer after payment, preventing double recovery; it cannot be contracted away in advance.

The Financial Services and Markets Act 2000 and FCA/PRA rules govern authorisation, conduct, approved persons, and the Financial Ombudsman Service's jurisdiction over complaints.

Claims notification must be prompt and within policy time limits; late notification prejudices the insurer only where it causes actual prejudice, following the Insurance Act 2015.

The claims handler must verify cover, policy period, insured interest, and any exclusions or conditions before accepting liability; indemnity is calculated after liability is admitted.

Total loss of a vehicle is settled at market value less excess and salvage; partial loss is repair cost less excess, subject to the sum insured and betterment adjustments.

Average applies to underinsured property claims: settlement = loss × (sum insured / value at risk), reducing recovery proportionately for the shortfall.

Third-party liability claims require investigation of negligence, causation, and quantum; the insurer may settle or defend and is bound by the insured's admissions only where authorised.

Salvage and subrogation recoveries reduce the net claims cost; the insurer must not recover more than it paid and must account to the insured for any surplus.

Fraudulent claims may be rejected in full and the policy avoided from the date of the fraudulent act, with the insurer retaining premium and recovering prior payments.

Complaints must be acknowledged promptly and resolved within eight weeks, after which the complainant may refer the matter to the Financial Ombudsman Service at no cost.

Motor insurance is compulsory for third-party bodily injury and property damage under the Road Traffic Act 1988; uninsured driving is a criminal offence.

Home buildings cover insures the structure against fire, storm, flood, subsidence, and escape of water; contents cover insures movable property and personal liability.

Employers' liability insurance is compulsory for employers in Great Britain under the Employers' Liability (Compulsory Insurance) Act 1969, with a minimum limit of £5 million.

Public liability covers third-party injury or property damage arising from the insured's business; products liability covers damage caused by goods supplied.

Personal accident policies pay fixed benefits for death, disablement, or medical expenses regardless of fault, unlike liability policies which indemnify legal liability.

Travel insurance typically combines medical expenses, cancellation, baggage, and personal liability; pre-existing medical conditions must be declared and may be excluded.

Life assurance pays a sum assured on death or survival; term assurance has no investment element, while whole-of-life and endowment policies accumulate value.

Commercial property policies may include business interruption cover, which indemnifies lost gross profit and increased working costs following an insured peril.

Underwriters assess hazard, moral hazard, and physical hazard; moral hazard concerns the proposer's honesty and attitude, physical hazard concerns the risk itself.

Rating factors must be actuarially justified and non-discriminatory; gender-neutral pricing applies following the Test-Achats ruling, and age or occupation factors need evidence.

The proposal form is the primary risk information source; incomplete answers may be treated as non-disclosure and affect the validity of cover.

Aggregation and accumulation control limit exposure to a single event or location; reinsurance treaties (quota share, surplus, excess of loss) transfer catastrophic risk.

Sum insured adequacy is assessed at inception; underinsurance triggers average, so index-linking and reinstatement valuations reduce claims disputes.

Risk improvement recommendations (sprinklers, alarms, security) reduce premium or excess; non-compliance with warranties suspends cover until remedied.

Declinature and special terms (exclusions, increased excess, higher premium) must be communicated clearly and recorded on the policy schedule.

Exposure management includes monitoring claims experience, renewal review, and portfolio diversification across classes and geographic regions.