How much do you know about underinsurance?

1. Underinsurance can occur under which of these lines of insurance business?

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2. Should customers include VAT in their building sums insured?

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3. To keep sums insured in line with changes in the cost of reinstating properties, according to the Royal Institute of Chartered Surveyors (RICS) how often should a full professional valuation be conducted?

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4. A building’s declared reinstatement value is £750,000. The policyholder suffers a loss, which will cost £500,000 to repair the building.

The building’s true reinstatement value is in fact £1,000,000, so it is underinsured. What level of claims settlement should the customer expect to receive after the condition of average is applied?

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5. Which of these is a broker under a duty to do when sourcing insurance for a customer?

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6. A policy insures contents on a reinstatement basis. How should a customer approach setting an adequate sum insured?

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7. A customer is insuring a large item of machinery on a reinstatement basis. The item is old and now out of production. What value should they use as a starting point when setting an appropriate sum insured?

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8. Which is the correct formula for calculating a gross profit sum insured under a business interruption policy?

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9. What are ‘uninsured working expenses’ for the purposes of calculating a gross profit sum insured?

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10. Which of the following should a customer use to choose their Public Liability limit of indemnity?

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