Chapter 5 Flashcards
Principle of good faith
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
ab initio
An insurer is estopped from avoiding policy ab initio if their previous behaviour suggests they have waived those rights.
A material circumstance
is one which would influence the judgement of a prudent insurer in fixing the premium or determining whether they will take the risk
Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA)
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
Insurance Act 2015 (IA 2015
which came into force on 12 August 2016, extends much of the legislation set out in CIDRA to non-consumer insurance contracts
Kettlewell v. Refuge Assurance Company (1909)
ensuring that statements made are true: misleading an insured about policy cover is a breach of good faith
Commercial property
insurance
A policy condition requires continuing disclosure of removal to another location, or circumstances that increase the risk of damage
Motor insurance
There is usually an nonerous policy condition that requires continuing disclosure of all material changes by the insured, during the currency of the policy.
Public liability insurance
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.
policy endorsements
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.
Physical hazard
material circumstances that concern possible physical
hazards in relation to non-life proposals E.g fire insurance ,theft insurance and motor insurance
Moral hazard
They relate either to the insurance history of the insured or to their personal
history or attitude:
• Insurance history
• Personal history
What is the legal duty of a proposer?
To take reasonable care not to make a misrepresentation. Information provided must be true to the best of their knowledge
What acts set out the duties of consumers and business/commercial?
Consumers - Consumer Insurance (Disclosure and Representation) Act 2012
Commercial - Insurance Act 2015
How does the duty of disclosure apply to the insurer
Notify insureds of entitlements to discounts
Only taking on risks the insurer is registered for
Ensuring statements are true + not misleading about coverage