Chapter 3 Flashcards
What is the consideration given by insurers when an insurance contract is formed?
An agreement to pay claims in accordance with the terms of the policy.
Agency by consent must be?
Expressed or implied.
which is an example of a short period insurance contract?
Travel Insurance.
where a policy allows the insured to cancel a mid-term term what is the generally accepted norm regarding how any return premium is calculated?
A pro rata return premium should be given
under the law of agency, what is an undisclosed principal?
someone for whom an agent acts while seeming to act on their own behalf.
what should be included in the premiums and credit section of the insurers TOBA?
The broker’s obligation to release all statutory documentation.
Where the parties to a contract have agreed to use the post as a method of communication, when is acceptance of an offer complete?
When the letter of acceptance is posted.
Margaret has bought herself a new top-of-the-range sports car. The first insurer she contacts for a quotation offers to cover her at a premium of £975, subject to her having an immobiliser fitted to the vehicle. Margaret confirms that she wants to go ahead with cover on this basis. This is an example of:
unconditional acceptance.
In which circumstances is an insurer most likely to invoke the cancellation condition in a home insurance policy?
If the insurer suspects the insured is guilty of fraud in connection with a claim.
In which circumstances is an independent intermediary considered to be the agent of the insured?
When giving advice on cover, the placing of insurance or on how to make a claim.
One of the duties of an agent to their principal is a duty of good faith. This means that they must:
not allow their own interest to conflict with their duties towards their principal.
When a policy is due for renewal, which of the following is an insurer required to do to comply with FCA rules?
Provide appropriate information in good time so that customers can make an informed decision.
What is a claimant in regard to legal cases?
The party who brings a civil action in a court of law
What is a defendant in regard to legal cases
The party against whom an action is bought in a court of law.
What is Contract Law?
An agreement enforceable by law
To ensure a valid and enforceable contract is formed an agreement must be?
Offer and acceptance
Consideration
Which parties of a contract must act in good faith
All.
What is unconditional acceptance?
offer is accepted on the original terms and conditions.
what is a conditional acceptance?
where a counteroffer is offered the original offer is rejected.
What is consideration?
Each other part of the bargain supports the contract E.G. payment of the premium from the insured.
Policy renewal should be offered….
In good time
New regulatory rules were introduced by the FCA in April 2017 that requires insurers selling retail general insurance products to…
disclose the previous year’s premiums
include text to encourage consumers to check their cover and shop around
if been with a company for 4 consecutive year encourage that they should be shopping around
How many days does a consumer have to cancel for payment protection policies
30 days
Which policy can an insurer not charge for a cancelation
Payment protection Contract
What did the Deregulation Act 2015 Change?
Policy cancelled mid term the policyholder is no longer required to return the certificate.
What is fulfilment?
The total loss of a subject matter , meaning the contract is automatically terminated.
What is a breach of warrenty?
According to the Marine Insurance, Act 1906 is an insurance contract that must be exactly and literally complied with whether material to the risk or not.
What did the Insurance Act 2015 change in regard to a breach of warranty?
cover will be suspended from the time of the breach until the breach has been remedied.
Under the Insurance Act if a fraudulent claim is made the insurer is….
Not liable to pay a claim
can recover any amount already paid for the claim
choose to terminate the contract from the date of the fraudulent act
If the insurer chooses to terminate a contract due to a fraudulent claim it can…
Refuse all liabilities occurring after the date of the fraudulent act
not return any premium.
What are the 3 methods in which the relationship of a principal and agent can arise
Consent
Necessity
Ratification
When can an agency by necessity be created?
when a person is entrusted with someone else’s goods and it becomes necessary to act in a certain way in an emergency.
What is Agency by ratification?
When an agent acts without authority, and is acting outside the terms of an agency agreement.
an agent of the insured is considered when?
Giving advise on cover
giving advice on how to make a claim
What is express Authority?
May be oral or written
which following situations would an insurance policy be voidable at the option of the insurer?
Where the insurer discovers that the insured has deliberately failed to disclose two previous claims when taking out a fire policy.
