ICOBS 5.1 General
Eligibility to claim benefits: general insurance contracts and pure protection contracts
- (1)
1In line with Principle 6, a firm should take reasonable steps to ensure that a customer only buys a policy under which he is eligible to claim benefits.
- (2)
If, at any time while arranging a policy, a firm finds that parts of the cover apply, but others do not, it should inform the customer so he can take an informed decision on whether to buy the policy.
Eligibility to claim benefits: payment protection contracts
A firm arranging a payment protection contract must:
- (1)
take reasonable steps to ensure that the customer only buys a policy under which he is eligible to claim benefits; and
- (2)
if, at any time while arranging the policy, it finds that parts of the cover do not apply, inform the customer so he can take an informed decision on whether to buy the policy.
For a typical payment protection contract the reasonable steps required in the first part of the eligibility rule are likely to include checking that the customer meets any qualifying requirements for different parts of the policy.
Disclosure of material facts
A firm should bear in mind the restriction on rejecting claims for non-disclosure (). Ways of ensuring a customer knows what he must disclose include:
- (1)
explaining the duty to disclose all circumstances material to a policy, what needs to be disclosed, and the consequences of any failure to make such a disclosure; or
- (2)
ensuring that the customer is asked clear questions about any matter material to the insurance undertaking.