Here are the best answers to the 20 questions we set last week on motor trade cover

1. Insurers normally seek a separate sum insured for portable hand tools because:

b) Theft losses mean that hand tools attract a higher rate of premium.

2. A director's personally-owned car will be covered under a company motor trade road risk policy:

c) While the vehicle is in the custody or control of the company for motor tradepurposes.

3. A windscreen extension to a road risks section:

a) Protects no claim discount in the event of a windscreen claim.

4. Motor traders would insure book debts because:

b) In the event of loss of accounting records by an insured peril, they would be able to make good their losses.

5. The loan or hire extension of a motor trade policy:

a) Enables firms to provide a car while a customer's is in the workshop for repair or service.

6. The money section of a motor trade policy will provide cover for cash:

b) Up to agreed limits while on the premises, in a safe, or in transit to the bank.

7. If a vehicle is being driven on a trade plate:

d) It must be for motor trade purposes.

8. Stock vehicles in a showroom or a display forecourt are insured:

c) Under the all risks or material damage section.

9. The spouse of a director of a motor trade company who has use of a firm's car is insured:

a) When using the vehicle for private use or on company business.

10. Under the public liability section cover is usually available:

b) To cover the motor trader should an accident arise as a result of negligent repair to a customer's vehicle braking system.

11. Cover for MOT loss of licence:

d) Is based on fee income on testing.

12. Vehicles owned by the policyholder and taxed for road use:

b) Must be included in material damage sum insured for own vehicles.

13. Because of fluctuating stock values on new vehicles:

a) A motor trader could arrange vehicle stock cover on a monthly declaration basis.

14. If a motor trader wishes to demonstrate a car to a prospective purchaser:

c) A member of staff must accompany the customer unless unaccompanied cover has been arranged.

15. Third party bodily injury cover under the road risks section of a combined motor trade combined policy is usually:

c) Unlimited.

16. If a motor trader operates from more than one location:

c) A floating sum insured for vehicle stock can be arranged over all premises.

17. If it is warranted that an intruder alarm with Redcare signalling must be set whenever the premises are unoccupied overnight:

a) Failure to comply with the warranty could leave the policyholder uninsured in the event of a claim.

18. A motor trader who diversifies into other non-motor trade activities:

c) Should immediately advise his broker or insurer of the change.

19. A motor trader can provide motor insurance for his immediate family:

b) Only in respect of vehicles which are owned by the policyholder.

20. The servicing indemnity extension of the public liability section of a motor trade combined policy:

c) Will protect the motor trader in the event of an accident following negligent repair.

If you are getting used to this process of testing knowledge, certain factors will start to emerge from your efforts.

First, did you think that your results in this assessment would put the public at risk if you were allowed to advise on a motor trade policy? Be honest with yourself.

What we have to ask ourselves is which of these questions is most important if we are to satisfy regulatory standards of knowing sufficient that the public (in this case motor trade businesses) are not at risk.

Look at question 1 again. How serious do you think it is if you got that wrong - and questions 3 and 5?

And now compare these to questions 17, 18, and 19.

Do you see how not knowing the answers to these last three is perhaps much more serious than the other three mentioned above.

What we learn from this is that when a good assessment of knowledge is constructed, it is important to distinguish between those questions we feel an adviser should get right before advising the public unsupervised and those that might be classed as non-mandatory.

Notice how there is no mention of a pass mark. Simply a question of those that must be right and another number of questions which you as a firm might decide ought to be right.

As an exercise, go through the questions again and just mark those which you think should be mandatory and of those which are left, consider how many you would want an adviser to get right before seriously doubting his/her competence to do the job.

Remember that this is only the first stage of demonstrating competence (knowledge and understanding) and even if you or one of your staff meets the benchmarks you set on a knowledge assessment such as this, you will still have the task of assessing whether you or they can apply this knowledge in practice.

You must also consider whether these 20 questions are sufficient to cover the role of advising a customer on the subject of motor trade insurance?

Our view is that for a subject such as this there are perhaps 30 or more key questions. For reassurance that you are not going to be struggling for this sort of facility as FSA authorisation approaches, the word on the grapevine is that the CII and Biba are working on something rather special for brokers - so watch this space.

Ultimately, you have to make the choice between aiming to do something until you can get it right, or aiming to do something until you cannot get it wrong.

The first standard is that of achieving reasonable competence, the second standard is that of being a professional. It is your decision.

Email us with subjects you would like to see included in the MOT tests over the coming months.

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