Chapter 2

Question 1

Law of contract

Answer 1

Relationship between two parties; one agrees to perform or do something and the other also performs or does something

Question 2

Contract def

Answer 2

An agreement, enforceable by law, between two or more person

Question 3

Insurance contract def

Answer 3

An agreement, enforceable by law, between an insured and insurer

Question 4

Essentials of a valid contract (2)

Answer 4

1. Offer and acceptance 2. Consideration

Question 5

Good faith

Answer 5

Neither party can intentionally mislead one another

Question 6

Unconditional acceptance

Answer 6

Accepts the initial offer immediately without issuing a counter offer

Question 7

Postal acceptance - when is the contract accepted and becomes valid?

Answer 7

At point of postage

Question 8

Consideration as defined in Currie vs Misa 1875

Answer 8

Some right, interest, profit, or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other

Question 9

Consideration def

Answer 9

Each person’s side of the bargain which supports the contract

Question 10

Insurable interest

Answer 10

The legal right to insure arising out of a financial relationship recognised at law

Question 11

Subject-matter of insurance

Answer 11

What is actually being insured

Question 12

Insurer’s own insurable interest

Answer 12

Purchasing reinsurance to protect the risks they have written

Question 13

Insurable interest at life insurance contracts

Answer 13

Must exist at inception but need not exist at the time of a loss

Question 14

Insurable interest at marine insurance contracts

Answer 14

Must exist a the time of loss but need not exist at inception

Question 15

Insurable interest at general insurance contracts

Answer 15

Must exist at both inception and at loss

Question 16

Two types of misrepresentations under Consumer Insurance Act 2012

Answer 16

1. Carelessness 2. Deliberate or reckless

Question 17

E.g of Physical hazard

Answer 17

Construction of a building and stuff installed

Question 18

E.g. of Moral Hazard

Answer 18

If the proposer has any criminal convictions or has any insurance declined previously

Question 19

Ought to know

Answer 19

Insurer OTK something if it is known by agent of the insurer and if the info has been reasonably passed on to the recipient of the decision to accept risk

Question 20

Presumed to know

Answer 20

Insurer PTK something that is common knowledge

Question 21

How many days’ notice must an insurer allow when cancelling a policy?

Answer 21

14

Question 22

Proximate Cause

Answer 22

The dominate causing the resulting loss

Question 23

Insured Perils

Answer 23

Those named in the policy as covered

Question 24

Excepted or excluded perils

Answer 24

Those named in the policy as specifically not covered

Question 25

Uninsured or unnamed perils

Answer 25

Those perils not mentioned at all in the policy

Question 26

Indemnity

Answer 26

Financial compensation sufficient to place the insured in the same financial position following the loss as they were in before the loss

Question 27

Sum Insured method

Answer 27

(Policy / Sum of both available limits) x loss

Question 28

Excess

Answer 28

Amount deducted from each claim and paid by the insured