CH1

Question 1

Define risk

Answer 1

Chance or possibility of danger,loss or injury

Question 2

Define policy holder

Answer 2

The insured person

Question 3

Privity of contract

Answer 3

Means only Policy holder can be dealt with, paid etc

Question 4

Insurer

Answer 4

Sells/provides policy

Question 5

Broker

Answer 5

Arrange and provide advice on insurance policies

Question 6

Co-insurer

Answer 6

Group of insurers sharing a risk, when a claim is made usually lead insurer deals with claim

Question 7

Lloyds broker

Answer 7

Approved by council of Lloyds

Question 8

Lloyds of London

Answer 8

Society formed in 1871 and provides services to the Lloyds market

Question 9

Underwriter

Answer 9

Takes on risk and imposes terms on policy

Question 10

Underwriting agency

Answer 10

Does not take on risk but will provide support in niche areas

Question 11

Financial conduct authority(FCA)

Answer 11

Regulate financial services in UK
Protect consumers
Protect integrity of systems
Promote effective competition in the market

Question 12

Financial ombudsman service (FOS)

Answer 12

Settle complaints and disputes consumer and businesses providing financial services

Question 13

Chartered Loss Adjusters

Answer 13

Assess claims and advice on cover and remedial works. Must be registered with FCA

Question 14

Chartered institute of loss adjusters (CILA)

Answer 14

Control conduct of members, formed 1941, became chartered 1961

Question 15

Loss assessor

Answer 15

Employed by policyholder to assist with claim

Question 16

British Damage Management Association (BDMA)

Answer 16

Ensures best practices are followed/taught within the restoration industry

Question 17

Association of British Insurers(ABI)

Answer 17

Represent collective interests of industry and debates within Britain.

Question 18

Chartered insurance institute (CII)

Answer 18

Provides exams and qualifications to those within the insurance industry.

Question 19

European Federation Of Adjusting Association (FUEDI)

Answer 19

Promote independent and impartial profession of loss adjusting in Europe.

Question 20

International Federation of Adjusting Association (IFAA)

Answer 20

Represent interests of Loss Adjusting Associations world wide.

Question 21

British Insurance Brokers Association (BIBA)

Answer 21

Represents insurance broker firms in Britain for around 1700 firms

Question 22

Other parties

Answer 22

Co-insurers, Re-insurers, Actuaries

Question 23

Essentials of contract

Answer 23

1.) Offer
2.)Acceptance
3.)consideration

Question 24

Offer

Answer 24

An offer must be made, this must be clearly stated. A vague statement will not hold up in court.

Question 25

Acceptance

Answer 25

Agreement to the offer , acceptance must be identical to the offer and must not try to introduce new terms

Question 26

Consideration

Answer 26

Each party to the contract must receive something of value. Consideration is the price paid for the others promise, usually money but could be something else like labour or perhaps an item

Question 27

Privity of contract

Answer 27

Privity means that only people who are party to the contract can sue or be sued

Question 28

Express and implied conditions

Answer 28

Express conditions are conditions that are stated in the contract. For example an insurance policy may state that all claims must be reported to the insurer within a given time frame

Question 29

Implied conditions

Answer 29

Do not need to be stated in the contract but they are implied; ie reporting a claim via morse code or carrier pigeon would not normally meet the terms of a contract but this does not need to be stated. The implied condition means reporting a claim contacting the insurer by a commonly accepted method I.e phone/email

Question 30

Unfair contract terms act 1977 and unfair terms in consumer contract regulations 1999

Answer 30

The courts and parliament recognise that while we are free to contract with anyone we choose(with some exceptions) the relative bargaining strength of each party is not the same. Companies use blanket terms and conditions to ensure it’s fair for all parties.

Question 31

Void and voidable contracts

Answer 31

Void means not valid, a contract can be void for various reasons such as;

The contract relates to illegal activities

Fulfilment of the contract is impossible;eg deliver a star to customer.

The contract relates to an event already in the past eg contract to admit entry for a concert that has already taken place

Question 32

Interpretation of ambiguous terms

Answer 32

If a dispute arises concerning a term with more than one possible meaning the contra proferentem rule is applied. This means where there is a more than one meaning, the least advantageous to the writer of the contract will be applied

Question 33

Contracts of upmost good faith

Answer 33

Insurance polices are contracts of upmost good faith.

When the insurer decides to provide cover they do not to get to inspect every property so the cover so they rely on the policyholder being truthful, if when a claim arises they find the policyholder has not kept upmost good faith they can decline cover or void policy on specific imposed terms

Question 34

Legal liabilities

Answer 34

Tort (a civil wrong)

Contract (an agreement between two parties or more)

Statutory (acts of parliament)

Question 35

Torts

Answer 35

A tort is a civil wrong.

Criminal wrong- deliberately hurting someone I.e assault in a bar

Civil wrong- accidentally hurting someone I.e someone slips on a wet floor

Sometimes a civil wrong can be classed as criminal due to being so careless I.e death by reckless driving or employer causing injuries to employees by neglecting H&S rules

There are a number of torts:

Negligence
Nuisance
The rule in Rylands v fletcher 1868
Trespass
Defamation of character

Question 36

Negligence

Answer 36

The definition of negligence was provided in blyth v Birmingham 1856
“Negligence is the omission to do something which a reasonable man guided upon those considerations which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do.

To prove negligence the claimant would need to prove these 3 points:

That a duty of care was owed to the person suffering the loss
That there was a breach of duty of care
That damage resulted from the breach of the duty of care.

Question 37

Duty of care

Answer 37

The event must be reasonably foreseeable
And the duty of care extends to people who are close to the act you are performing (my neighbour)

Question 38

Defences to negligence

Answer 38

Act of god

Volenti non fit injuria (voluntary assumption of the risk)

Contributory negligence

Question 39

Act of god

Answer 39

Act of god defends situations which loss or damage is sustained from a freak accident or something that couldn’t have been predicted. However if somebody knows there is pre existing damage to something, this would not be considered an act of god.

Question 40

Volenti non fit injuria

Answer 40

This relates to voluntary acceptance of risk I.e a boxer accepting the risk of being punched in the ring.

However this is not an absolute defence.

If you were at a football game and the ball hits you, you are not accepting that risk as you could claim you were not paying attention to the game

Question 41

Contributory negligence

Answer 41

Is where the injured party in some way contributed the cause or extent of the loss,damage or injury. For example a motorist not wearing a seatbelt, courts will reduce the amount of damages if contributory negligence is found.

Question 42

Nuisance

Answer 42

Two types of nuisance
Public and private

A public nuisance is one that effects the public as a whole. To succeed in an action for public nuisance you must proved you suffered beyond the extent of the public in general. For example selling food which is not fit for human consumption. Most public nuisances are considered a crime.

A private nuisance is associated with an ongoing action that causes disturbance to adjoining property. It has been defined and an unlawful interference with a persons use or enjoyment of land, or some right over or in connection with it.

Damage must be suffered by occupants on adjoining land.

Question 43

The rule in Rylands v fletcher 1868

Answer 43

This is the case that created strict liability, strict liability means that liability does not depend on proof of fault against the defendant.

Possible defences to strict liability are

Act of god
Act of stranger
Default of claimant
Consent of claimant
Statutory authority

Question 44

Trespass

Answer 44

Trespass is for our purpose intentional or negligent interference with the possession of goods or another.

The remedies for trespass are
Damages- the amount by which the value is diminished, NOT the reinstatement cost.

Injunction- a legal device to prevent the continuance or repetition of the act of the trespasser

Ejection- reasonable force only may be used to eject a trespasser, and any more than reasonable force may result in an assault charge.

An action of ejection to recover the land.

Question 45

Contract

Answer 45

Liabilities can arise from from a breach of contract. This could be a breach of a specific term of the contract or could be as a result of an implied contract term.

The remedies of a breach of contract are:

Refusal of further performance.
Actions for damages

Quantum meruit- the amount that is paid is the value for the work completed

Specific performance- an enforcement of the contract.

Injunction

Recession- cancellation/annulment

Question 46

Statutory

Answer 46

A statutory liability exists where a statute is in force which provides that there is a liability as a result of the provisions of the statute.

The sale and supply of goods act 1994 requires that goods sold in the course of business must be of satisfactory quality. This means that they should be fit for purpose and safe.

The water industry act 1991 provides that, other than in certain situations a water provider is responsible for damage caused by the escape of water from their pipes however this arises.

Question 47

Insurable interest

Answer 47

Insurable interest arises if a Person or company would:

Benefit from the continued existence of the property insured or would be prejudiced by its loss damage or destruction.

Question 48

The four essential elements of insurable interest

Answer 48

There must be a physical object which is capable of being lost, destroyed or damaged.

The physical object must constitute the subject matter of the insurance.

The policyholder must have some legal relationship with that object

The value of that insurable interest must be measurable in monetary terms.

Question 49

Ways insurable interest can arise

Answer 49

Ownership, mortgagor or mortgagee

Bailees- a baliee is a person who holds the property of others, either gratuitously(without payment) or for reward(for payment) examples of bailees include warehousemen and repairers and the like

By statute- For example, the hotel proprietors act 1956 which, although limiting the liability or the hotel proprietor, creates a statutory obligation in return for limited liability imposed.

Insurers- insurers have an insurable interest in the property they are insuring enabling them to reinsure.

Tenants- clearly a tenant would be prejudiced if his home or business premises were destroyed.