Personal General Insurance
Core concepts
Understand indemnity, utmost good faith, insurable interest, proximate cause, and contribution/subrogation. Know household and motor cover structures, excesses, sum insured vs. sum assured, and average/underinsurance clauses. Grasp new-for-old versus indemnity settlement and the meaning of betterment. Learn how no-claims discounts and policy excess affect premiums.
Traps
Questions confuse subrogation (insurer steps into the insured's shoes to recover from a third party) with contribution (insurers sharing a loss). Watch for average clauses in commercial property (less common in personal lines but tested). Another trap: consequential loss is often excluded unless specifically covered.
Rule of thumb
Under a condition of average, claim payment = (sum insured ÷ actual value) × loss. Underinsurance reduces payouts proportionately.
Worked example
Property worth £200,000 insured for £150,000 with average applied; a £20,000 loss is paid as (150,000 ÷ 200,000) × 20,000 = £15,000. The insured bears £5,000 themselves - demonstrating why accurate sums insured matter.