Valid claims and claims settlement

Who has the onus of proof in an insurance claim?

Insured proves loss and peril; insurer checks cover and policy terms.

Onus of proof

the responsibility to prove something

What are the insured’s duties after a loss?

must act as if uninsured by minimising the loss, informing authorities where needed, preventing further damage, and co‑operating with the insurer—otherwise the claim may be invalid.

What are express duties after a loss?

Follow the policy’s claims procedure or risk losing the claim.

What is a claim form and why is it used?

Used to confirm cover and assess claims (motor = accident report form).

What information is included in a claim form?

Details of the loss, circumstances, and supporting actions.

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What checks does an insurer make when receiving a claim form?

checks that cover was in force, the peril is insured, and there was no breach of fair presentation, then assesses whether the value of the loss is reasonable, often using experts or automated systems.

What supporting evidence is needed for insurance claims?

depends on the claim type, e.g. police lists for theft,

engineer reports and photos for accidents,

medical evidence for injury or sickness,

vehicle documents for total‑loss motor claims.

What is the role of a loss adjuster?

Independent expert who investigates and assesses claims for insurers.

What is contribution in insurance?

Claims shared between insurers covering the same risk.

What is average in insurance?

(Sum insured ÷ value at risk) × loss = claim payment

What is subrogation in insurance?

Insurer can recover claim costs from the responsible third party.

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What is arbitration in insurance?

Resolves claim amount disputes, not liability

What is Alternative Dispute Resolution (ADR)?

Settles disputes outside court (mediation or conciliation). mediation (facilitator, no decisions) and conciliation (may recommend a binding settlement).

What is the ABI Personal Effects Contribution Agreement?

simplify contribution between insurers, avoid customer confusion and bad publicity, and reduce the time and cost of handling small shared claims.

What are bilateral agreements in insurance?

Two insurers agree to settle claims directly and quickly.

What is the Motor Insurers’ Bureau (MIB)?

Compensates victims of uninsured or untraced drivers.

What is the Uninsured Drivers Agreement?

MIB pays claims caused by uninsured drivers. Covering personal injury (unlimited) and property damage (up to £1.2m).

What is the Untraced Drivers Agreement?

MIB pays claims for hit‑and‑run accidents.

What changed under the MIB Agreements from 1 March 2017?

Widened compensation by removing terrorism exclusions, allowing some vehicle damage claims even if uninsured, setting new excesses (£400 for untraced), and tightening rules on injury thresholds, reporting to police, and costs.

What methods can insurers use to settle claims?

Cash, repair, replace, or reinstate.

How are claims paid to third parties in liability insurance?

Insurer pays the third party directly.

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What is the Third Parties (Rights against Insurers) Act 2010?

Third parties can claim directly against insurers if the insured is insolvent.

What is the Enterprise Act 2016 (insurance claims)?

Requires insurers to pay valid claims within a reasonable time, and allows policyholders to claim damages if an unreasonable delay causes additional loss.

What is salvage in insurance?

Any remaining value of damaged property after a total loss; once a claim is settled, the insurer is entitled to the salvage to prevent the insured receiving more than an indemnity.

What is the reserving process in insurance?

Estimating future claim costs to ensure enough funds are held.

What methods do insurers use to recover claim costs?

Contribution from insurers + Subrogation from third parties.

What happens if an insured makes a fraudulent claim?

Under the Insurance Act 2015, insurers do not have to pay a fraudulent claim, can reject all future claims, but must still pay valid claims made before the fraud; fraud is tackled by bodies like the IFB, IFIG, and the Insurance Fraud Register (IFR).

How is insurance fraud detected?

Using shared industry databases (e.g. CUE, Art Loss Register, MIAFTR) and through claims handlers, who look for warning signs such as early claims, missing documents, or inconsistent details.

What are the consequences of insurance fraud?

Insurance fraud increases costs for insurers, leads to higher premiums for all policyholders, and encourages repeat fraud by claimants if it goes undetected.