Personal General Insurance: Indemnity and Disclosure
What to master
Personal general insurance is indemnity-based: the insurer restores the insured to the pre-loss financial position, subject to sums insured, excesses and policy conditions. Know insurable interest, the duty to disclose material facts, average or underinsurance, excess, no-claims discount, subrogation and contribution. Motor insurance has compulsory third-party cover; household policies cover buildings and contents with limits and exclusions. The Consumer Protection Code requires clear disclosure, renewal notices, claims handling and complaints procedures. “All risks” is not literally all risks; exclusions and warranties still apply. At renewal, the duty of disclosure continues, and a change in risk must be notified.
Traps
Treating new-for-old cover as indemnity. Forgetting the average clause when sums insured are below reinstatement value. Assuming a named driver has the same cover as the policyholder. Missing material non-disclosure at proposal or renewal. Confusing an excess with an excess waiver. Ignoring mid-term changes such as extensions or new drivers.
Worked example
Sum insured €80,000; actual reinstatement value €100,000; loss €20,000. Average applies: 80,000 ÷ 100,000 × 20,000 = €16,000, less any excess. Rule of thumb: insure to full reinstatement value unless the policy is deliberately on an indemnity basis.