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IF1 Get ready > Chapter 3 Contract and agency > Flashcards

Chapter 3 Contract and agency Flashcards

1
Q

What are the essentials of a valid contract

A

Offer and acceptance

Consideration

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2
Q

What is usually the consideration in insurance

A

The premium

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3
Q

Does a conditional acceptance form a valid contract

A

No it is not an acceptance it is a counter offer

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4
Q

If I post an acceptance when is it deemed that I have accepted an offer

A

When acceptance is posted

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5
Q

How soon must insurers warn insureds about renewal under ICOBS?

A

In good time

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6
Q

What were the three new renewal rules introduced by the FCA in April 2017

A

Previous year’s premium to be disclosed
Text to encourage consumers to shop around
Additional prescribed notice for insurers who have renewed four consecutive times

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7
Q

What is usually the cooling off period for consumer contracts

A

14 days

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8
Q

What is usually the cooling off period for PPI contracts

A

30 days

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9
Q

What is a cooling off period

A

Period in which consumers can cancel a policy

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10
Q

Do cooling off periods apply to all consumer insurance contracts

A

No, they do not apply to short term travel policies

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11
Q

Identify three other ways an insurance contract can be terminated.

A

Fulfilment
Voidable
Fraudulent acts

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12
Q

Following the Insurance Act 2015 what is insurers’ remedy if the policyholder breaches a warranty

A

Coverage is suspended whilst it is being breached,

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13
Q

If a policyholder submits a fraudulent claim what are insurers’ remedies?

A

Insurer not liable to pay clam
Can recover amounts already paid on claim
Can choose to terminate contract from date of fraudulent act

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14
Q

If an insurer decides to terminate coverage following a fraudulent claim what can they do?

A

Can refuse liability for all matters after fraudulent act

Do not have to return premiums

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15
Q

In a Group contract if an individual insured submits a fraudulent claim can the insurer terminate cover for the other indicivduals insured

A

No

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16
Q

Who is a broker usually an agent of?

A

The policyholder/insured

17
Q

Identify three ways agency can be created

A

By consent/agreement (TOBA)
By necessity
By ratification

18
Q

What is the difference between express and implied authority?

A

Express authority is expressly given usually specified in a terms of business agreement (TOBA)
Implied authority is assumed given the nature of the relationship

19
Q

As an agent what duties does a broker owe to the insured

A

Advice on coverage

Advice on claim

20
Q

In what circumstances may a broker act as an agent of an insurer

A

Authorised by insurer to receive and handle proposal forms
Surveys property on insurer’s behalf
Collects premiums on insurers behalf
Authorised to pay claims by insurer

21
Q

Identify five duties owed by an agent to its principal

A

Obedience
Care and skill
Personal performance
Good faith
Accountability
~~~

22
Q

Identify two duties owed by the principal to the agent

A

Remuneration

Indemnity agaist losses incurred on the principal’s behalf

23
Q

If it appears to a third party that an agent has the authority of their principal (apparent authority) will the principal be bound by any agreement the agent makes on their behalf with the third party

A

Yes

24
Q

Identify three ways an agency agreement can be terminated

A

By mutual agreement
Terminated by principal or agent
Performance
By death, bankruptcy, insanity

25
Q

Identify four functions of a TOBA

A

Be clear and succinct
Reflect the business relationship
Define and allocate responsibilities and rights
Ensure compliance with regulatory duties and rules

26
Q

Identify seven items that will be part of a broker insurer TOBA

A 
Status
Commission
Material information
Premiums and credit
Claim money
Broker/client relationship
Direct administration
Claims
Termination
Regulatory requirements
Accounting procedures
Assignment
Arbitration
Variation of terms
Signature
Authority
Indemnity
27
Q

What is a TOBA?

A

Terms Of Business Agreement

28
Q

Who else may a broker have a TOBA with other than insurers?

A

Their client

Sub brokers

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