General Insurance Products and Features
What this domain tests
General Insurance Products and Features covers property, motor, marine, liability and health covers. The exam wants you to read a policy as a set of promises, limits and conditions, and to compute claim payments rather than simply name the product.
Core rules
- Property policies respond on an indemnity basis: actual cash value (replacement cost less depreciation) or replacement cost if endorsed.
- Named-peril policies list covered perils; all-risk covers everything except exclusions, and the burden of proof differs.
- The co-insurance/average clause penalizes underinsurance: recovery = loss × (sum insured ÷ required sum insured).
- Deductibles and policy limits cap or share the loss.
- Motor: compulsory third-party liability (CTPL) is required for vehicle registration; own-damage and theft covers are optional.
- Marine cargo: Institute Cargo Clauses A, B and C vary in breadth; general average contributions may apply.
- Liability policies pay sums the insured is legally liable for, plus defense costs within limits.
Worked example
A warehouse worth PHP 8 million is insured for PHP 4 million under a fire policy with an 80% co-insurance clause and a PHP 100,000 deductible. A fire causes PHP 1 million damage. Required sum insured = 80% × 8 million = 6.4 million. Recovery = 1 million × (4 ÷ 6.4) = PHP 625,000, less the deductible = PHP 525,000. Reasoning: the insured carried only 62.5% of the required amount, so she shares the shortfall. The deductible is applied after the average calculation.
Traps that cost marks
- Forgetting the deductible is subtracted after averaging.
- Averaging applies even when the loss is genuine and the insured is blameless.
- Treating CTPL as covering the insured's own vehicle.
- Assuming all-risk means all perils with no exclusions.