Chapter 2 Flashcards
Law of contract
Relationship between two parties; one agrees to perform or do something and the other also performs or does something
Contract def
An agreement, enforceable by law, between two or more person
Insurance contract def
An agreement, enforceable by law, between an insured and insurer
Essentials of a valid contract (2)
- Offer and acceptance 2. Consideration
Good faith
Neither party can intentionally mislead one another
Unconditional acceptance
Accepts the initial offer immediately without issuing a counter offer
Postal acceptance - when is the contract accepted and becomes valid?
At point of postage
Consideration as defined in Currie vs Misa 1875
Some right, interest, profit, or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other
Consideration def
Each person’s side of the bargain which supports the contract
Insurable interest
The legal right to insure arising out of a financial relationship recognised at law
Subject-matter of insurance
What is actually being insured
Insurer’s own insurable interest
Purchasing reinsurance to protect the risks they have written
Insurable interest at life insurance contracts
Must exist at inception but need not exist at the time of a loss
Insurable interest at marine insurance contracts
Must exist a the time of loss but need not exist at inception
Insurable interest at general insurance contracts
Must exist at both inception and at loss
Two types of misrepresentations under Consumer Insurance Act 2012
- Carelessness 2. Deliberate or reckless
E.g of Physical hazard
Construction of a building and stuff installed
E.g. of Moral Hazard
If the proposer has any criminal convictions or has any insurance declined previously
Ought to know
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
Presumed to know
Insurer PTK something that is common knowledge
How many days’ notice must an insurer allow when cancelling a policy?
14
Proximate Cause
The dominate causing the resulting loss
Insured Perils
Those named in the policy as covered
Excepted or excluded perils
Those named in the policy as specifically not covered
Uninsured or unnamed perils
Those perils not mentioned at all in the policy
Indemnity
Financial compensation sufficient to place the insured in the same financial position following the loss as they were in before the loss
Sum Insured method
(Policy / Sum of both available limits) x loss
Excess
Amount deducted from each claim and paid by the insured
