Chapter 4

Question 1

Good Faith Laws

Answer 1

• CIDRA 2012
• Insurance Act 2015

Question 2

Insurance Product Information Document (IPID)

Answer 2

Provides a consistent, non-personalised product summary for easy comparison of insurance products

Question 3

No Claims Discount Evidence

Answer 3

Previous insurer’s renewal notice or other documentation, or verification through industry databases

Question 4

Cover Note

Answer 4

Provides temporary evidence of insurance coverage until permanent documents are issued

Question 5

Motor Vehicles (Third Party Risks) Regulations 1972 Certificates

Answer 5

Form A: Specified Vehicle Certificate

Form B: Blanket Certificate for Fleets or Motor Trade

Form C: Certificate incorporated into Cover Notes

Question 6

Cartwright v. McCormack Case 1963

Answer 6

A cover note’s duration includes the entire day of expiry, ending at midnight

Question 7

How long after a policy expires should information be kept?

Answer 7

7 years after expiry

Question 8

Requirements for design of insurance certificates

Answer 8

• to be printed on a black or white background
• exclude advertising matter, except for the insurer’s badge/logo
• be issued in paper, plastic card or electronic form

Question 9

What circumstances must an insurer issue a replacement certificate?

Answer 9

• the certificate is lost or destroyed
• the certificate is defaced

Question 10

Windscreen Insurance Disks

Answer 10

WIDs must be issued for vehicles registered in the Channel Islands, along with certificates of insurance

Question 11

Premium for Mid-Term policy adjustments

Answer 11

Calculated pro-rata, based on the number of days remaining in the policy term

Question 12

Cooling-off period

Answer 12

14 days

Question 13

Mid-Term Cancellation Rates

Answer 13

1 month - 20% due
2 months - 30% due
3 months - 40% due
4 months - 50% due
5 months - 60% due
6 months - 70% due
7 months - 80% due
8 months - 90% due
Over 9 months - Full Premium

Question 14

Suspension of Cover

Answer 14

• minimum of 4 consecutive weeks
• vehicle must be SORN
• pro-rata refund, adjusted for residual risks like fire and theft

Question 15

Misrepresentation and Non-Disclosure Actions

Answer 15

• cancel policy and keep all premiums
• adjust policy on different terms

Question 16

Law Commission Review 2006

Answer 16

Focused on customer duty of disclosure, breach of warranty and misrepresentation

Aimed to address the unfair balance against proposers under the current law

Question 17

Material Facts

Answer 17

Defined as disclosing anything influencing a “prudent insurer”

Question 18

Types of Misrepresentation under CIDRA

Answer 18

• Innocent
• Careless
• Deliberate / Reckless

Question 19

Breach of Duty of Fair Presentation

Answer 19

• deliberate / reckless breach
• non-deliberate breach

Question 20

Insurance Act 2015 and Warranties

Answer 20

Breach of warranties now suspend, not terminate, the insurer’s liability

Coverage resumes once the breach is remedied

Question 21

Enterprise Act 2016

Answer 21

Insurers must pay claims within a reasonable time, or risk paying damages for financial loss caused by delays

Question 22

Two Exceptions to Traditional Renewal Invitation

Answer 22

• short period insurances
• long term agreements

Question 23

Renewal Retention Rate

Answer 23

Retaining customers reduces acquisition costs and ensures stability
Long-term PH’s are less likely to shop around or generate fraud claims

Question 24

FCA Requirement on Renewal Invitations

Answer 24

Insurers must invite renewal in good time or provide adequate notice if renewal will not be invited

Question 25

Dual Pricing or Price Walking

Answer 25

Offered lower premiums to new customers, penalising loyal customers and was banned by the FCA in 2022

Question 26

Information for a Renewal Notice

Answer 26

- insurer details - policyholder information - policy number - renewal date - insured vehicle details - renewal premium - NCD entitlement

Question 27

Commercial Renewals

Answer 27

- retroactive premium adjustments - fleet exposure reviews - negotiations between stakeholders

Question 28

Agent of the Proposer for advising on Insurance Needs

Answer 28

An independent intermediary is regarded as the agent of the proposer, but this may vary during proposal completion and providing information to the insurer

Question 29

Tied Agent

Answer 29

A tied agent, representing one insurer, is usually regarded as the agent of the insurer

Question 30

When is an Intermediary deemed to act as an agent of the Insurer?

Answer 30

When empowered to grant cover on the insurer’s behalf, such as issuing temporary cover notes

Question 31

Stockton v. Mason 1978

Answer 31

Established that a broker with implied authority to issue interim cover on behalf of the insurer could create a valid interim insurance contract

Question 32

Delivery of Certificates of Insurance

Answer 32

Physically delivery is required, but posting is sufficient as postal authorities are regarded as agent of the receiver

Question 33

Starkey v. Hall 1936

Answer 33

A finance company holding policy documents could not deliver them as they were not authorised agents of the policyholder

Question 34

Electronically Issued Documents

Answer 34

- enable fast delivery, reduced costs and allow policyholders to access and modify policies online - the RTA allowed EDI from 30 April 2010 to run parallel with posting the policies