1.1 Principles of Good faith (2D) Flashcards
Explain the principle of good faith
The principle applies equally to both the proposer and the insurer throughout the contract negotiations and means that both parties should be open and transparent with each other in the sharing of key info relating to the risk.
What does good faith mean for the insured?
They have the duty to disclose all material facts about the risk to the insurer
What does good faith mean for the insurer?
Holding true to what was agreed during negotiations throughout the policy, ensuring the best value possible for the risk ensured and not withholding any potentially cost saving information.
What are the two types of misrepresentations under the consumer insurance (disclosure and representations) Act 2012?
Careless and deliberate or reckless
How is a misrepresentation deliberate or reckless?
The consumer knew it was untrue or misleading or didn’t care about this.
Knew that the matter to which the representation related was relevant to the insurer, or didn’t care.
What can the insurer do if they can prove that the actions taken were deliberate or reckless?
void the contract and refuse all claims and keep the premiums attained
What can the insurer do if the insured is merely careless when claims are involved?
If not have entered the contract on any terms, then they may void the policy and return premiums.
If they would have entered contract but on different terms then it is to be treated as being entered as those terms, if the insurer requires.
If insurer would have entered contract but with higher premiums, they can reduce any amounts paid on claims.
What can the insurer do if the insured is careless when no claims are involved?
The same first two points as when claims are involved
can give notice to the insured of contract termination/variation
insured can also give termination notice
premiums must be repaid for policy length
Any arising claims during notice period before termination will have to be considered in the usual way
What is the requirement of the ICOBS?
insurers must not unreasonably reject a claim
What is ICOBS definition for unreasonable?
not disclosing a material fact which the policyholder could not have been expected to disclose
non-negligent misrepresentation of a material fact to the risk
What is fair presentation defined as under the insurance act of 2015? (the law on disclosure and representations of non-consumer insureds?
One which makes disclosure of every material circumstance which the insured knows or ought to know, or disclosure
