Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

M21 Commercial Insurance Contract Wording > Chapter 2: Legal Factors: the parties and the wording > Flashcards

Chapter 2: Legal Factors: the parties and the wording Flashcards

1
Q

Key components of a insurance contract is…

A

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

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are the essentials of a valid contract?

A

Offer and acceptance ; consideration

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is offer and acceptance

A

Party makes and offer and the other accepts unconditionally

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is conditional acceptance (Qualified acceptance)

A

Accept the offer provided that a few changes are made

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is consideration from the insured?

A

Payment of the premium

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are the features of insurable interest

A

Subject matter ; need for legal relationship ; financial value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is subject matter of insurance

A

What is actually being insured

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is subject matter of contract

A

Relationship between insured and subject matter of insurance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Who undertakes the drafting of a commercial contract?

A

By the broker or agent acting on behalf of the insured or insurer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Why has the need to issue a separate formal document fallen away?

A

The MRC and its attached contract wording form the commercial insurance contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What has the MRC allowed insurers, brokers and clients to do?

A

Evidence contract certainty at inception

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the GUA and what did it replace?

A

General Underwriting Agreement and it replaced the Lead Underwriting Agreement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is the purpose of a GUA?

A
  • Agreement between subscribing underwriters for management of changes
  • Clarify extent of delegated authority to the slip leader and agreement parties
  • Enable each class to define their specific requirements and needs
  • Allow single slip leader to agree contract alterations where they are empowered to
  • Ensure notification of all underwriters where necessary
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What does the GUA state more clearly?

A

What can be agreed by authorising underwriters

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Is there a ‘hold harmless’ clause in the GUA?

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

When must the notification of other markets take place?

A

Within 5 working days

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is a ‘hold harmless’ clause?

A

Follow markets agree to waive any rights they have against the leader/authorising insurers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Do the slip leaders and agreement parties owe a duty of care to the following underwriters?

A

Yes, as they are their agent

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Is there several or joint liability under the GUA?

A

Several not joint

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

When can underwriters opt-out of the application of the GUA?

A

Inception or currency of the cover

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What law governs the GUA?

A

English Law

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is a coverholder?

A

A company or partnership or individual authorised by an insurer to enter into a contract of insurance on its behalf

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Contract terms of the authorisation are generally authorised under…

A

Binding authorities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What do Binding authorities allow the insurer to do?

A
  • Gain access to business it may not have a opportunity to see
  • Obtain business in parts of the world where it does not have an office
  • Benefit from local expertise
  • Acquire income at low cost
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

What are the benefits for brokers when binding authorities are used?

A

Gain access to the Lloyd’s brand,
incur fewer costs in placing business;
cover can be given immediately

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Who may coverholders be?

A

Specialist companies; insurance brokers; agencies

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Does the coverholder hold responsibility for the risk it has undertaken?

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

What the 4 forms of binding authority?

A
  1. Full binding authority
  2. Limited binding authority
    Lloyd’s Binding
  3. Approved coverholders
  4. Restricted coverholders
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

What is full binding authority?

A

Defines classes of risk that may be bound.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

What is limited binding authority?

A

Require prior approval or for the insurer to actually quote terms

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

What are approved coverholders?

A

Authorised to enter into contracts of insurance under ‘registered’ binding authorities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

What are restricted coverholders?

A

Must be authorised to enter into contracts of insurance under ‘restricted’ binding authorities

Must be a company whose registered office is in the UK / a partnership in the UK and regulated by the FCA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Market arrangements are called…

A

Lineslips

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Lineslips are used by brokers to…

A

establish a market for a class of business with a number of insurers agreeing their lines

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

How are risks bound on a lineslip

A

Under the facility by off-slips by the leader or leading underwriter

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

What is the relationship between the coverholder and insurer?

A

Coverholder is an agent for the insurer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

When placing a lineslip whom does a broker owe a duty to exercise reasonable skill and care?

A

The leading underwriters

38
Q

What is the Managing Agent’s Code of practice for delegated Underwriting?

A

All considerations to be taken into account by a managing agent when appointing a coverholder

39
Q

How does the MRC for binding authorities differ from the Open Market MRC?

A
  • Risk details section is replaced with Schedule and Non Schedule sections
  • No requirement for several liability language as included already in binding authority wording
  • GUA’s are not used
40
Q

What is the factual matrix?

A

Test to help interpret terms with common sense as opposed to it literal meaning

41
Q

What is departed from when using the factual matrix?

A

Words should be given their natural meaning where possible,

the parol evidence rule

42
Q

What is the parol evidence rule?

A

Oral and written material cannot be admitted as evidence in a dispute about the meaning of a written contract

43
Q

Contra Proferentum

A

Contract term is interpreted in a way least favourable to the party putting it forward

44
Q

Interfoto rule

A

Unusual term that has not been disclosed can be ignored

45
Q

Oral and written promises that contradicts the policy conditions gives rise to a

A

Collateral contract

46
Q

Terms not stated but intended by parties are…

A

Terms implied by fact

47
Q

Why may a implied term be necessary?

A

To give business efficacy

48
Q

Terms implied by custom of usage are

A

terms implied by market of operation, locality or trade

49
Q

Terms implied by law are

A

the rights and duties of partied based on the law

50
Q

What is more important in insurance, conditions or warranties?

A

Warranties

51
Q

Is cover terminated if a warranty is breached?

A

No due to IA 2015. Cover is suspended until the breach is

52
Q

A condition that must be met before the contract can come into effect

A

Condition Precedent to the contract

53
Q

What is a condition precedent to liability?

A

A term that allows insurers to avoid liability for a particular loss if the term is broken but not avoid contract as a whole

54
Q

Conditions not viewed as being in the main agreement are known as

A

Collateral Conditions / Mere Conditions

55
Q

Can insurers avoid the policy / claim if collateral conditions are breached?

A

No - can only claim for damages

56
Q

How should a subjectivity be expressed as?

A

An unambiguous condition - specifying the responsibilities and timescales for resolution and any consequences of failure of the contract

57
Q

What are the 4 things a subjectivity should set out?

A
  1. The condition/action that needs to occur
  2. the applicable timescale
  3. the terms which are to apply
  4. consequences which follow if not met
58
Q

What case did the court state that multi-sectioned policies are composite not joint?

A

Printpak v AFG (1999)

59
Q

What is the general feature when drafting of choice of law and jurisdiction clauses?

A

Keep simple and broad

60
Q

What is a service of suit clause

A

Names a local organisation what the insurer has authorised to accept service of suit on its behalf

61
Q

What is the main purpose of a service of suit clause?

A

Avoid delay and expense associated with the insured suing

62
Q

Sanction breaches create…

A

criminal and civil liability

63
Q

How do sanctions clauses protect an insurer?

A

Ensuring that it is not contractually required to perform certain activities with exposes it to sanctions

64
Q

What should a sanctions clause be used alongside?

A

a compliance programme with due diligence and screening

65
Q

What are sanctions clauses designed to protect against?

A

Matters which cannot reasonably be identified through pre-underwriting due diligence
Uncertainties inherent in sanctions regiemes

66
Q

When completing a proposal form for property insurance, a business erroneously declared that its heating system was oil-fired instead of gas-fired. Following the implementation of the Insurance Act 2015, the insurance contract will:

A

not necessarily be voided from inception.

67
Q

A riding school’s insurance includes a warranty that hay is kept in a separate store but this condition wasn’t satisfied until three months after the policy commenced. Subsequently, a fire broke out in just the office area. A claim for fire damage and losses:

A

will be paid because although there was a breach of warranty, it was remedied before the loss occurred.

68
Q

Where insurance is provided by a syndicate, Lloyd’s or otherwise, the lead insurer is expected to:

A

have more administrative rights and duties under the policy than its co-insurers.

69
Q

An underwriter has entered into a Leading Underwriters Agreement with the six other underwriters that have accepted risk on an insured. This agreement allows:

A

small amendments to be made by the lead underwriter to the contract between it and the other six underwriters, without the change being publicised.

70
Q

Three underwriters for Lloyds specialise in insurance for light aircraft. The lead underwriter decided to accept the insurance risk of a small aircraft manufacturer, which subsequently made a £1 million claim. The lead underwriter:

A

does not owe a duty of care to the following underwriters of the same risk.

71
Q

Was there a requirement for insurable interest at the time of the claim of Dalby V. The India and London Life Assurance Company (1854)

A

No

72
Q

What is the principle of LUA’s?

A

Enable small changes to be make to contract terms by leading underwriter or 2+ leading insurers without having to notify the market

73
Q

How can insurable interest be created?

A

By common law, contract and statue

74
Q

What distinguishes insurance contracts from other contracts?

A

Obligation of good faith owed by the insured to the insurer and vice versa

75
Q

What duty does both the insurer and policyholder have?

A

Duty to disclose any material information relating to the risk.

76
Q

When a policy is issued does this override a slip?

A

Yes

77
Q

If there is a dispute what is amended to reflect the true agreement?

A

Either the policy or the slip

78
Q

Who prepares the closing document, setting out the extent of the underwriter’s obligation and commits the insured to the policy documents?

A

The broker

79
Q

The contract terms of the authorisation are generally provided under?

A

Binding authorities

80
Q

When do problems arise with delegated authorities?

A

When the scope of the authority is inadequately defined or the coverholder acts outside its authority

81
Q

Does an express term override an implied term?

A

Yes

82
Q

Do law districts need to match nation states?

A

No

83
Q

What is a suspensory effect on sanctions?

A

Suspend an insurer’s liability to perform a contract for period they are in force

84
Q

Do sanction clause affect the nature of cover given or scope of the cover?

A

No

85
Q

Name four implied terms in an insurance contract

A
  1. In marine insurance - MIA 1906 carries automatically into every policy as an implied warranty that the insured vessel is seaworthy
  2. Subrogation
  3. Duty of good faith
  4. Insured’s duty to act as uninsured (No legal authority)
86
Q

Name six exceptions to the parol evidence rule

A
  1. External evidence can be used to solve ambiguity
  2. Evidence of a custom
  3. Where a contract appears not to contain all terms of the agreement
  4. Evidence of an implied term is not covered
  5. Contract term can be overridden by express oral warranty or collateral contract
  6. Extrinsic evidence can be used to prove the identity of the parties
87
Q

In what four ways can a term be implied into a contract?

A
  1. In fact
  2. In law
  3. By custom
  4. By usage
88
Q

In respect of a commercial insurance contract wording, what does the factual matrix clarify?

A

The contextual meaning of the terms.

89
Q

Within the terms of the General Underwriters Agreement, which party will typically agree a
premium adjustment following a quarterly declaration of turnover?

A

The slip leader on behalf of all other underwriters

90
Q

In insurance contract law, a warranty may be a promise made by the insured in relation to

A

past facts, present facts or the continuance of a state of affairs.

91
Q

A commercial reinsurance contract between an English reinsurer and a Chinese insurer states that exclusive English jurisdiction applies. What does this mean in the event of a dispute between the parties to the contract?

A

All parties must go to the English courts.

M21 Commercial Insurance Contract Wording (6 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions