Chapter 5 Flashcards

1
Q

Principle of good faith

A

Good faith means that disclosure must be made in a reasonably clear and accessible manner, material
representations of fact expectation or belief must be substantially correct

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2
Q

ab initio

A

An insurer is estopped from avoiding policy ab initio if their previous behaviour suggests they have waived those rights.

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3
Q

A material circumstance

A

is one which would influence the judgement of a prudent insurer in fixing the premium or determining whether they will take the risk

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4
Q

Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA)

A

came into force on 6 April 2013. CIDRA removes the common law duty on consumers to disclose
any information that a prudent underwriter would consider material and replaces this with a
duty to take reasonable care not to make a misrepresentation

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5
Q

Insurance Act 2015 (IA 2015

A

which came into force on 12 August 2016, extends much of the legislation set out in CIDRA to non-consumer insurance contracts

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6
Q

Kettlewell v. Refuge Assurance Company (1909)

A

ensuring that statements made are true: misleading an insured about policy cover is a breach of good faith

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7
Q

Commercial property

insurance

A

A policy condition requires continuing disclosure of removal to another location, or circumstances that increase the risk of damage

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8
Q

Motor insurance

A

There is usually an nonerous policy condition that requires continuing disclosure of all material changes by the insured, during the currency of the policy.

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9
Q

Public liability insurance

A

The continuing requirement for disclosure for this class of business arises from
the fact that insurers tightly define ‘the business’ of the insured in the policy.
This means that the insured must notify any extension of activities for cover to apply. A condition requiring ongoing disclosure of material circumstances may
be coupled with this.

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10
Q

policy endorsements

A

Many insurers will also include policy endorsements – which form part of the contract – that place responsibility on the insured to notify of all material changes.

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11
Q

Physical hazard

A

material circumstances that concern possible physical

hazards in relation to non-life proposals E.g fire insurance ,theft insurance and motor insurance

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12
Q

Moral hazard

A

They relate either to the insurance history of the insured or to their personal
history or attitude:
• Insurance history
• Personal history

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13
Q

What is the legal duty of a proposer?

A

To take reasonable care not to make a misrepresentation. Information provided must be true to the best of their knowledge

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14
Q

What acts set out the duties of consumers and business/commercial?

A

Consumers - Consumer Insurance (Disclosure and Representation) Act 2012

Commercial - Insurance Act 2015

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15
Q

How does the duty of disclosure apply to the insurer

A

Notify insureds of entitlements to discounts

Only taking on risks the insurer is registered for

Ensuring statements are true + not misleading about coverage

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16
Q

When does the duty of disclosure exist?

A

starts when negotiations start and ends when the contract is formed (inception). It begins again when renewal negotiations take place. During the policy there is no duty of disclosure unless the circumstances effect the policy cover. EG for motor insurance if you change your car you must declare it, but you do not have to declare a conviction for fraud until renewal

17
Q

What material circumstances need to be disclosed

A

Physical and moral hazards