chapter 3 Flashcards
Consumer Contracts (CIDRA 2012):
Proposer must take reasonable care not to misrepresent.
Remedies depend on whether the breach was deliberate, reckless, or careless.
Non-Consumer Contracts (Insurance Act 2015):
Proposer must present the risk fairly.
Remedies depend on intent and presentation quality.
What is the purpose of the recital clause in an insurance policy?
The recital clause introduces the contract, explaining its nature, and confirms the agreement between the policyholder and the insurer.
What does the recital clause typically state about third-party rights under the contract?
It states that third parties cannot enforce the contract under the Contracts (Rights of Third Parties) Act 1999, except where required by the RTA.
The insured has a garage risks motor trader policy and is able to add the following options to the standard cover, EXCEPT:
public hire or reward.
Diafra owns and runs a private hire car firm. The insurance cover on his hire cars will differ from private motor insurance because:
cover is invariably restricted to Diafra and any named employees or contractors.
Martin drives a commercial vehicle that includes insurance cover for personal accident, medical expenses and personal belongings. He is most likely to drive a:
small van as part of his self-employed business.
Jana drives a 75cc motorcycle and Amir drives a family car. Jana’s insurance policy will differ in that typically it will:
not allow ‘driving other cars or motorcycles’ cover.
Pete is the owner of a car. He does not drive the car but his wife, Elaine, does. The car is also driven by their children, Sophie and Fred, who are additional drivers. Under the Road Traffic Act 1988, who would be required to have third party insurance?
Elaine, Sophie and Fred only.
What is the typical third-party property damage (TPPD) limit for private motor car policies?
£20 million
What are the primary exclusions in a motor insurance policy?
Use for racing, trials, or competitions
Driving without a valid licence
War risks
Nuclear risks
Contractual liability
What is the difference between BTE and ATE legal expenses insurance?
BTE (Before the Event): Covers legal costs anticipated for future incidents.
ATE (After the Event): Covers legal costs after an incident has occurred, often linked with conditional fee agreements (CFAs).
What is the purpose of excess protection insurance?
To reimburse the policyholder for excess paid in a claim, subject to certain exclusions like windscreen claims or declined claims.
What does GAP insurance cover?
Financial Shortfall: Pays the difference between the motor insurer’s settlement and the outstanding finance.
Return to Invoice: Covers the gap between the motor insurer’s settlement and the vehicle’s original purchase price.
Replacement Vehicle: Covers the cost of replacing the insured vehicle with an equivalent new one.
What is contingent liability insurance?
Insurance for a principal’s liability if a contractor’s insurance fails to cover claims arising from their work.
What is a key feature of a self-drive hire policy?
It limits cover to the hired vehicle and excludes use for the carriage of passengers for hire or reward unless specifically arranged.
What is indemnity to principal in commercial vehicle policies?
Extends cover to a principal if the insured vehicle causes damage or injury while performing contracted work.
What is the typical use restriction for agricultural vehicle policies?
Use for agricultural purposes only, with exclusions for crop spraying off the insured’s farm unless specially arranged.
What are the three main types of motor trade policies?
Road risks policy
Garage risks policy
Combined road and garage risks policy
What is the difference between Class 1 and Class 2 business use?
Class 1: Covers social, domestic, and business use by the policyholder.
Class 2: Extends business use to the policyholder and their employer or business partner.
What is the Green Card system?
An internationally recognized motor insurance certificate used for driving in certain foreign countries.
What is unauthorized movement cover in commercial vehicle policies?
Provides cover for moving unattended vehicles obstructing access in the normal course of work.
What does Class 3 business use include?
Covers social, domestic, and pleasure use, and the business of the policyholder and their employer, including commercial traveling.
What is a skip hire exclusion in commercial vehicle policies?
Once a skip is detached, it is not covered under the motor policy; public liability cover is required.
Between £1.2 million (RTA minimum) and £5 million, depending on the risk.
What is the typical TPPD limit for commercial vehicle policies?
What are cross liabilities?
An extension treating separate entities in a group as distinct parties for the purposes of legal claims.
What is a contingent liability policy?
Provides cover for a party’s vicarious liability if another party’s insurance fails to operate, such as an employer’s liability for an employee using their vehicle.
