🧮 Duties in the claims process; calculating the claim payment

1. Under the Consumer Insurance Contracts Act 2019, once an insured event occurs, what is the consumer's statutory duty in relation to the insurer's investigation of the claim?

1. To cooperate with the insurer and answer reasonable requests honestly and with reasonable care
2. To disclose every fact a prudent insurer would regard as material, whether or not asked
3. To instruct an independent loss assessor before the insurer begins its investigation
4. To provide only the information expressly listed in the policy schedule

Section 16(1) requires the consumer to cooperate with the insurer's investigation, answering reasonable requests honestly and with reasonable care; the older duty to volunteer all material facts unprompted was replaced by the 2019 Act. (Consumer Insurance Contracts Act 2019, s.16(1))

2. Under the Consumer Insurance Contracts Act 2019, where a policy sets a time limit for notifying a claim and the consumer notifies later than that limit but the delay causes the insurer no prejudice, what is the legal position?

1. The insurer may reduce the claim payment in proportion to the length of the delay
2. The insurer may not refuse liability on the ground of the late notification alone
3. The insurer may refuse the claim only where the delay exceeds six months
4. The insurer may refuse the claim but must then refund the premium paid

Section 16(3) bars an insurer from refusing liability solely for breach of a notification time limit where the delay causes it no prejudice; there is no statutory six-month cut-off or automatic pro-rata reduction. (Consumer Insurance Contracts Act 2019, s.16(2) and s.16(3))

3. A householder is hospitalised after a break-in and notifies her insurer of the burglary claim three weeks later than the policy's 'as soon as reasonably possible' clause requires. The delay does not hinder the insurer's investigation in any way. Can the insurer rely on the late notification to decline the claim?

1. Yes, because any breach of a notification clause is an absolute bar to payment
2. No, but only if she can prove she was physically unable to notify sooner
3. No, because the delay caused the insurer no prejudice
4. Yes, provided the delay exceeded fourteen days

Section 16(3) prevents an insurer refusing liability for breach of a notification condition where it suffered no prejudice, without requiring proof of a specific incapacitating reason. (Consumer Insurance Contracts Act 2019, s.16(3))

4. Once a consumer makes a claim, what duties does the Consumer Insurance Contracts Act 2019 place on the insurer in handling it?

1. To settle the claim in full within seven working days, regardless of investigation
2. To appoint the consumer's own broker to independently assess the quantum
3. To publish the settlement terms on the Central Bank of Ireland's claims register
4. To handle the claim promptly and fairly, and give the amount and reasons for settlement

Section 16(4) requires the insurer to handle claims promptly and fairly, engage with the consumer, and communicate the amount and reasons for the settlement or disposal. (Consumer Insurance Contracts Act 2019, s.16(4))

5. Where the insurer cannot quantify the full value of a claim within a reasonable time but part of it has already been quantified, what does the Consumer Insurance Contracts Act 2019 require?

1. The insurer must pay the quantified part within a reasonable time, pending the balance
2. The insurer may withhold the entire payment until the total value is agreed
3. The insurer must pay the full estimated value immediately and adjust it later
4. The insurer must refer the entire claim to the Injuries Resolution Board

Section 16(9) requires payment of the already-quantified part within a reasonable time, even where the total value cannot yet be established, read with s.16(8). (Consumer Insurance Contracts Act 2019, s.16(8) and s.16(9))

6. After a consumer makes a claim, the Consumer Insurance Contracts Act 2019 imposes a continuing mutual duty on both parties. What does that duty require?

1. Each party must disclose information only when the other makes a formal written request
2. Whichever party learns of information affecting the claim's validity must tell the other, even where privileged
3. The consumer alone must disclose adverse information; the insurer's duty is limited to its own file
4. Privileged information is always exempt from disclosure between the parties

Section 16(10) creates a continuing mutual duty for either party to disclose information bearing on the claim's validity to the other, extending even to information that would otherwise be privileged. (Consumer Insurance Contracts Act 2019, s.16(10))

7. In a disputed insurance claim, how is the burden of proof generally allocated between the parties?

1. The insurer must disprove the claim from the outset, with no initial burden on the insured
2. The Financial Services and Pensions Ombudsman allocates the burden case by case
3. The insured must first show the loss falls within cover; the insurer then bears proving any exclusion
4. The burden always remains on the insured, for both cover and any exclusion relied upon

The insured must first establish, on the balance of probabilities, that the loss falls within cover; the burden then shifts to the insurer to prove any exclusion or condition it relies on. (General insurance law/evidence principles applied in Ireland)

8. A property policy validly allows the insurer to defer part of a claim settlement until reinstatement works are completed. The agreed settlement amount is €38,000. Under the Consumer Insurance Contracts Act 2019, what is the maximum amount the insurer may lawfully defer?

1. €3,800
2. €2,000
3. €3,900
4. €1,900

Because the settlement is below €40,000, the deferral cap is 5% of it: 5% x €38,000 = €1,900; €3,800 wrongly applies the 10% rate reserved for settlements of €40,000 or more. (Consumer Insurance Contracts Act 2019, s.17(3)(c))

9. Under section 17(3)(c) of the Consumer Insurance Contracts Act 2019, where an agreed claim settlement is below the statutory threshold of €40,000, how is the maximum amount the insurer may defer pending completion of reinstatement works determined?

1. It is capped at 5% of the settlement amount
2. It is capped at 10% of the settlement amount
3. It is fixed at a flat €2,000 regardless of the settlement amount
4. The whole settlement may be deferred until the works are finished

Below the €40,000 threshold the deferrable share is capped at 5% of the settlement, rising to 10% where the settlement is €40,000 or more; the cap is a proportion of the settlement, not a flat sum, and the insurer may not defer the entire amount. (Consumer Insurance Contracts Act 2019, s.17(3)(c))

10. Two years after a policy incepted, an insured made a valid storm-damage claim that was paid in full. This year the same insured submits a theft claim containing information she knows to be false. On discovering the fraud, can the insurer treat the earlier storm-damage claim as tainted and reclaim what it paid?

1. Yes, because one proven fraud entitles the insurer to unwind every claim ever paid under the policy
2. No, a later fraudulent claim does not affect the validity of an earlier claim properly made
3. Yes, but only if both claims were notified within the same policy year
4. No, but only where the earlier claim was also for property damage

Section 18(2) provides that a fraudulent claim does not taint an earlier valid claim made under the same policy; the insurer's remedies under s.18(1) attach only to the fraudulent claim itself. (Consumer Insurance Contracts Act 2019, s.18(1) and s.18(2))

11. In Castellain v Preston, the courts described the fundamental object of a contract of indemnity in general insurance. What is that object?

1. To guarantee the insured a fixed sum of money regardless of the actual amount of loss suffered
2. To restore the insured to the financial position as if the insurance contract had never been made
3. To place the insured in the same financial position after the loss as before it, no better and no worse
4. To compensate the insured with the full replacement cost, regardless of the property's prior condition

Castellain v Preston established that indemnity insurance restores the insured's pre-loss financial position without conferring a profit: fully indemnified but never more than fully indemnified. (Castellain v Preston (1883) 11 QBD 380 (CA))

12. On a standard indemnity-basis property policy, how is the measure of indemnity generally calculated for a damaged item?

1. The original purchase price of the item, uplifted for inflation to the date of loss
2. The insured's own combined estimate of the item's sentimental and replacement value
3. The average of three independent professional valuations obtained by the insured after the loss
4. The repair or reinstatement cost, or the market value at the time and place of loss, less wear and tear

Under the indemnity basis, payment reflects repair or reinstatement cost, or market value, less a deduction for wear, tear and depreciation (betterment), consistent with Castellain v Preston. (Principle of indemnity (Castellain v Preston (1883) 11 QBD 380))

13. A household contents policy is written on a 'new for old' reinstatement basis. A five-year-old television, damaged beyond repair by a covered fire, is replaced under the claim. How is the claim payment calculated?

1. The cost of a new equivalent television, with no deduction for the wear and tear of the old one
2. The cost of a new equivalent television, less a deduction for five years of wear and tear
3. The second-hand market value of a five-year-old television of the same model
4. The original purchase price paid for the television five years ago

A reinstatement (new-for-old) basis waives the usual wear-and-tear/betterment deduction, so the insured receives the cost of a new equivalent item; the second option describes the ordinary indemnity-basis calculation instead. (Principle of indemnity (Castellain v Preston (1883) 11 QBD 380))

14. In the context of the measure of indemnity, what does the term 'betterment' refer to?

1. The extra premium charged for upgrading a policy from an indemnity basis to a reinstatement basis
2. The improvement in the insured's position from receiving a new item without deduction for the old item's wear
3. The automatic increase applied to the sum insured at each policy renewal to track inflation
4. The profit margin an insurer builds into a settlement to cover its own claims-handling costs

Betterment is the element of improvement an insured would gain by being put in a better position than before the loss; ordinarily it is deducted unless a reinstatement basis waives it. (Principle of indemnity (Castellain v Preston (1883) 11 QBD 380))

15. A building with a full reinstatement value of €200,000 is insured for only €150,000, and the policy is subject to the pro rata condition of average and a €500 excess. A fire causes damage assessed at €40,000. After applying average and then the excess, what amount does the insurer pay?

1. €39,500
2. €30,000
3. €29,500
4. €40,000

Average first reduces the loss proportionately to the under-insurance: (150,000/200,000) x 40,000 = €30,000; deducting the €500 excess gives €29,500. (Pro rata condition of average (Marine Insurance Act 1906, s.81); excess as a policy condition)

16. The pro rata condition of average in a property policy applies in which circumstance?

1. Where the sum insured exceeds the full value at risk, so the insured is over-insured
2. Where the insured fails to notify a claim within the policy's time limit
3. Where two or more policies cover the same insurable interest against the same peril
4. Where the sum insured is less than the full value at risk, so the insured is under-insured

Average applies to under-insurance, reducing the claim payment in the same proportion that the sum insured bears to the full value at risk. (Pro rata condition of average (standard general insurance policy condition); Marine Insurance Act 1906, s.81)

17. How does a policy excess differ from a franchise in the calculation of a claim payment?

1. An excess is deducted from each claim; a franchise means the insurer pays the whole claim once its threshold is exceeded
2. An excess applies only to liability claims, whereas a franchise applies only to property damage claims
3. An excess is always calculated as a percentage of the sum insured, whereas a franchise is a fixed euro amount
4. An excess is automatically waived after a claim-free year, whereas a franchise can never be waived

An excess is a deductible borne on each and every claim; a franchise is a threshold below which nothing is paid but above which the insurer pays the claim in full without deduction. (Standard general-insurance practice (policy conditions: excess, deductible, franchise))

18. A marine cargo policy carries a franchise of €1,000 rather than an excess. A covered loss of €1,500 occurs. How much does the insurer pay?

1. €500, being the loss less the franchise amount
2. €1,500, the full loss, because it exceeds the franchise threshold
3. Nothing, because the loss is below double the franchise amount
4. €1,000, capped at the franchise threshold itself

A franchise is a threshold, not a deductible: once the loss exceeds the stated franchise amount, the insurer pays the loss in full rather than deducting the franchise as an excess would. (Standard general-insurance practice (policy conditions: excess, deductible, franchise))

19. Which of the following is NOT normally a factor an insurer takes into account when assessing the measure of indemnity for a damaged item on an ordinary indemnity-basis property policy?

1. The cost of repairing the item to its pre-loss condition
2. The market value of the item at the time and place of loss
3. The insured's personal or sentimental attachment to the particular item lost
4. A deduction for wear, tear and depreciation already suffered by the item

The indemnity principle values loss objectively by repair cost, market value and a betterment deduction; subjective sentimental value has no place in the measure of indemnity. (Principle of indemnity (Castellain v Preston (1883) 11 QBD 380))

20. What does the principle of contribution allow an insurer that has paid a claim to do?

1. Recover the full amount from the insured if the insured is later found to be at fault
2. Recover the payment from a third party who caused the loss
3. Recover the payment from the Injuries Resolution Board where personal injury is also involved
4. Recover a rateable proportion of the payment from any other insurer also covering the loss

Contribution entitles an insurer that has paid a loss to recover a rateable proportion from other insurers also liable for the same loss; recovering from a third party responsible for the loss describes subrogation, a distinct right. (North British & Mercantile Insurance Co v London, Liverpool & Globe Insurance Co (1877) 5 Ch D 569; Castellain v Preston (1883) 11 QBD 380)

21. For contribution to arise between two insurers, the policies must cover the same subject matter, the same insurable interest and the same peril, and each insurer must be liable for the loss. Which of these is NOT one of the required conditions?

1. The two policies must have been issued by the same insurance company
2. The policies must cover the same subject matter
3. The policies must cover the same insurable interest
4. Each insurer must be liable for the loss under its own policy

Contribution arises between two or more different insurers covering the same interest, subject matter and peril; there is no requirement that the policies be issued by the same insurer. (North British & Mercantile Insurance Co v London, Liverpool & Globe Insurance Co (1877) 5 Ch D 569)

22. A warehouse is insured under two policies covering the same interest and the same peril, and neither policy is under-insured: Insurer A for €100,000 and Insurer B for €100,000. A loss of €30,000 occurs. Applying the principle of contribution, how much must Insurer B pay?

1. €15,000
2. €30,000
3. €10,000
4. €7,500

With equal sums insured and no under-insurance, contribution splits the loss equally, so each insurer pays half of the €30,000 loss, i.e. €15,000; €30,000 wrongly has one insurer bear the whole loss and ignores contribution. (North British & Mercantile Insurance Co v London, Liverpool & Globe Insurance Co (1877) 5 Ch D 569)

23. Which case is generally cited as establishing the modern principle of contribution between insurers, sometimes called the 'King and Queen Granaries' case?

1. Castellain v Preston (1883)
2. Marine Insurance Act 1906, s.81
3. North British & Mercantile Insurance Co v London, Liverpool & Globe Insurance Co (1877)
4. Consumer Insurance Contracts Act 2019, s.16

North British & Mercantile Insurance Co v London, Liverpool & Globe Insurance Co (1877) 5 Ch D 569, known as the King and Queen Granaries case, is the leading authority on contribution between insurers.

24. A car owner unknowingly holds two policies covering the same vehicle against the same perils with two different insurers. Following a covered accident, from whom may she recover the full amount of her loss?

1. Only the insurer with the higher sum insured, in proportion to its policy limit
2. Both insurers simultaneously, receiving the full loss amount twice
3. Neither insurer, because double insurance automatically voids both policies
4. Either insurer in full, leaving that insurer to seek contribution from the other

The insured may claim the full indemnity from either insurer; that insurer then has a right of contribution against the other, rather than the insured apportioning the claim or recovering twice. (North British & Mercantile Insurance Co v London, Liverpool & Globe Insurance Co (1877) 5 Ch D 569; Castellain v Preston (1883) 11 QBD 380)

25. How does the right of contribution differ from the right of subrogation?

1. Contribution is between insurers on the same loss; subrogation is against a responsible third party
2. Contribution operates against a responsible third party, whereas subrogation operates between insurers
3. Contribution and subrogation both apply exclusively to marine insurance contracts
4. Contribution requires the insured's prior consent, whereas subrogation does not require it

Contribution is a claim by one insurer against another insurer on the same risk; subrogation is the paying insurer stepping into the insured's rights against a third party responsible for the loss. (Castellain v Preston (1883) 11 QBD 380; Consumer Insurance Contracts Act 2019, ss.23-25)

26. Why is the right of contribution described as a corollary of the principle of indemnity?

1. Because it lets the insured choose which insurer pays first, regardless of policy wording
2. Because it stops an insured recovering more than the actual loss by claiming in full under several policies
3. Because it entitles the insurer to recover its payment from the insured if the insured was negligent
4. Because it obliges every insurer in the market to share losses on catastrophic events

Contribution is a corollary of indemnity because, without it, an insured with overlapping policies could recover more than the true loss by claiming the full amount from each insurer. (North British & Mercantile Insurance Co v London, Liverpool & Globe Insurance Co (1877) 5 Ch D 569; Castellain v Preston (1883) 11 QBD 380)

27. An insured holds two property policies: Policy X covers fire only, and Policy Y is an all-risks policy covering fire, flood and other perils. A loss occurs due to flood damage. Why can Policy X's insurer NOT be called on to contribute to the flood claim?

1. Because contribution never applies where one of the two policies is written on an all-risks basis
2. Because Policy X insured a lower sum, so it is automatically excused from contributing
3. Because Policy X is not liable for flood, so the 'same peril' condition for contribution fails
4. Because contribution only applies to marine insurance, not to property insurance

Contribution requires that both policies actually be liable for the peril causing the loss; since Policy X does not cover flood, it has no liability for this loss and cannot be called upon to contribute. (North British & Mercantile Insurance Co v London, Liverpool & Globe Insurance Co (1877) 5 Ch D 569)

28. A loss adjuster instructed by the insurer asks a consumer for documents and access to inspect fire-damaged premises. Under section 16(1) of the Consumer Insurance Contracts Act 2019, how must the consumer deal with such reasonable requests during the investigation?

1. By cooperating with the investigation and answering the requests honestly and with reasonable care
2. By disclosing only what the consumer personally judges relevant to the loss
3. By declining to engage until the consumer has appointed an independent loss assessor
4. By observing the pre-contractual duty of utmost good faith in every reply

Section 16(1) requires the consumer to cooperate with the insurer's investigation, including a loss adjuster acting for the insurer, and to answer reasonable requests honestly and with reasonable care; utmost good faith was the pre-2019 pre-contractual standard, not this post-claim duty. (Consumer Insurance Contracts Act 2019 (No. 53 of 2019), s.16(1))

29. Which of the following best describes the role of a loss adjuster in handling a general insurance claim?

1. A professional engaged and paid by the policyholder to prepare and negotiate the claim
2. An independent professional engaged by the insurer to investigate the loss, assess liability and recommend a settlement
3. An employee of the insurer who processes routine claims from notification through to payment
4. A panel professional appointed by the Injuries Resolution Board to assess the value of personal injury claims

A loss adjuster is an independent professional instructed and paid by the insurer, particularly for larger or complex losses, to investigate and recommend settlement; the first option instead describes a loss assessor. (Standard distinction between claim handler, loss adjuster and loss assessor)

30. A homeowner, after a fire, engages and pays an independent professional to prepare, document and negotiate the fire damage claim with the insurer on the homeowner's behalf. What is this professional's role called?

1. Loss adjuster
2. Claims handler
3. Loss assessor
4. Underwriter

A loss assessor is engaged and paid by the policyholder to present and negotiate a claim on their behalf, unlike a loss adjuster, who is instructed and paid by the insurer. (Standard distinction between claim handler, loss adjuster and loss assessor)

31. In a disputed general insurance claim, once the insured has shown on the balance of probabilities that a loss falling within the cover occurred, upon whom does the burden shift to prove that a policy exclusion applies?

1. The Financial Services and Pensions Ombudsman, as the claims dispute body
2. The insured, who must also disprove every possible exclusion
3. The loss adjuster appointed to investigate the claim
4. The insurer, since it seeks to rely on that exclusion

Once the insured establishes a loss within cover, the burden shifts to the insurer to prove that any exclusion or condition it relies on applies; neither the FSPO nor the loss adjuster bears this legal burden. (General insurance evidence principles applied in Ireland)

32. A consumer is dissatisfied with how an insurer's claim handler assessed and settled a household claim and wants the matter reviewed independently. In Ireland, to which body may the consumer bring a complaint about the insurer's conduct in handling the claim?

1. The Financial Services and Pensions Ombudsman
2. The Injuries Resolution Board
3. The Central Bank of Ireland, which arranges individual consumer redress
4. The Health Insurance Authority

Complaints about how a regulated insurer handled a claim are dealt with by the Financial Services and Pensions Ombudsman; the Injuries Resolution Board assesses personal injury quantum, the Central Bank supervises firms rather than ordering individual redress, and the Health Insurance Authority deals only with private health insurance. (Financial Services and Pensions Ombudsman Act 2017 (jurisdiction over complaints against regulated financial service providers))

33. After a claim has been made under the Consumer Insurance Contracts Act 2019, an insurer becomes aware of information that would undermine the claim's validity. What must the insurer do with that information, even if it would otherwise be privileged?

1. Withhold it, since legal privilege overrides the duty
2. Disclose it to the consumer as soon as practicable
3. Disclose it, but only if the consumer asks in writing
4. Disclose it, but only once the claim exceeds the excess

Section 16(10) imposes a continuing mutual duty: whichever party becomes aware of information supporting or prejudicing the claim's validity must disclose it to the other party, overriding privilege that would otherwise apply. (Consumer Insurance Contracts Act 2019 (No. 53 of 2019), s.16(10))

34. An insurer cannot quantify the full value of a large fire claim within a reasonable time, but has quantified part of it. Under section 16 of the Consumer Insurance Contracts Act 2019, what must the insurer do?

1. Withhold all payment until the entire claim is finally quantified
2. Pay the full amount originally claimed, including any disputed balance
3. Pay the quantified part within a reasonable time
4. Suspend the claim until the Injuries Resolution Board assesses quantum

Where the total value cannot be quantified within a reasonable time but part has been, section 16(9) requires the insurer to pay that quantified part within a reasonable time rather than delaying all payment. (Consumer Insurance Contracts Act 2019 (No. 53 of 2019), s.16(8) and s.16(9))

35. A consumer notifies a theft claim months after the policy's notification period, and by then key CCTV footage has been overwritten, genuinely prejudicing the insurer's ability to investigate. Under section 16(3) of the Consumer Insurance Contracts Act 2019, what is the insurer's position?

1. It may refuse liability, because the late notification actually caused it prejudice
2. It must still pay in full, because late notification can never justify refusal
3. It must pay, but may reduce the claim by a fixed statutory penalty for lateness
4. It may refuse only if the policy labels the notification clause a warranty

Section 16(3) prevents refusal for late notification only where the delay causes no prejudice; where, as here, the delay genuinely prejudices the insurer's investigation, the insurer may refuse liability on that ground. (Consumer Insurance Contracts Act 2019 (No. 53 of 2019), s.16(2) and s.16(3))