Chapter 2

Question 1

Contract Certainty

Answer 1

A complete and final agreement of all terms between the policyholder and the insurer by the time they enter into the contract, with documentation provided promptly after

Question 2

Insuring Clause

Answer 2

The promise to pay and the extent of that promise, describing the liabilities insured against in return for the premium paid

Question 3

Limit Of Indemnity / Sum Insured

Answer 3

“any one loss”
“each and every claim”
“in the aggregate”

Question 4

Market Reform Contract

Answer 4

• Lloyd’s Market
• Indicating their consent to the terms as presented and the share of their risk (their “line”)

Question 5

The Insuring Clause

Answer 5

Subject to all terms and conditions of the insurance, the insurer will indemnify the insured in the manner and to the extent specified in the policy

Question 6

Definitions Of Insured

Answer 6

personal lines - addressed as “you”, there will be a definition of “you” within the definitions section

commercial - the insured will usually include any associated and/or subsidiary companies

Question 7

Losses Occuring

Answer 7

used when the policy is intended to respond to physical damage or personal injury
has to occur during the policy period

Question 8

Claims Made

Answer 8

By definition, these are third party liability policies where a claim is made against the insured
These are generally used when the policy is intended to respond to financial loss arising from breach of duty or contract by the insured

Question 9

Occurrence Businesses

Answer 9

• property (first party)
• business interruption
• employer’s liability
• public liability
• product liability
• personal lines
• marine hull
• marine cargo
• marine liability
• motor

Question 10

Claims Made Businesses

Answer 10

• product recall
• product liability
• marine liability
• professional indemnity
• financial institutions
• directors’ and officers’

Question 11

Notify Conditions

Answer 11

• who the policyholder should notify the claim to
• how they are to communicate it
• if there is a time limit for the notification

Question 12

Reasons For Prompt Notification Compliance

Answer 12

• to provide opportunity to minimise loss
• they can be in a position to defend the claim properly
• they can meet any court or other deadlines
• in order to preserve their subrogation rights
• accurate understanding of outstanding liabilities and can set up an appropriate reserve

Question 13

Layher Ltd v. Lowe 2000

Answer 13

“a clause that requires the insured to give notice of circumstances which are likely to give rise to a claim means that noticed needs to be given if there is more than an even prospect (i.e more than a 50% possibility) that a claim will be made

Question 14

Kajima UK Engineering Ltd v. Underwriter Insurance Company Ltd (2008)

Answer 14

• Kajima notified their insurer about defects during construction
• Further investigations after the policy expired revealed more serious problems
• The court ruled that only the initially notified defects were covered
• The court emphasised the need for a clear connection between notified defects and subsequent claims

Question 15

HLB Kidsons v Lloyd’s Underwriters (2008)

Answer 15

the court of appeal had to consider whether the insured accountants had given effective notification of circumstances relating to flawed tax

Question 16

HLB Kidsons v. Lloyd’s Underwriters (2008) Court of Appeal

Answer 16

• preferred “reasonably clearly” over “no reasonable doubt”
• must have objective justification that the circumstance might lead to a claim
• notification must be a “fact, event, happening or state of affairs”
• definition likely to be adopted in future cases