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MO5 > Chapter 5 & 6LO5 > Flashcards

Chapter 5 & 6LO5 Flashcards

1
Q

Parties must agree on

A
  1. Nature / Subject matter
  2. Duration
  3. Amount of premium
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2
Q

Renewal notice = offer

A

Insured can accept by payment of premium, provided no changes to risk

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3
Q

Unilateral offer

A

Offeror promises to do something if another party does the act (e.g reward for finding a pet)

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4
Q

A promise to pay =

A

Consideration

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5
Q

Total failure of consideration

A

insured recover premium if insurer has not been on risk at all

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6
Q

Cancellation clauses & premium
If insurer cancels how much RP and vice versa

A

Partial return of premium if policy cancelled mid-term
Insurer cancel = pro rata return
Insured cancel = less than pro rata

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7
Q

Insurance contracts which must be in wriitng

A

Marine insurance policies under the (marine insurance act 1906)
- Name of insured / agent
- Signed by or on behalf of the insurer
- specify subject matter with reasonable certainty

Motor policies require certificate on insurance

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8
Q

Life insurance contract rules

A

Policy shall contain name of person interested
Other legislation require insurers to send insured a statutory notice advising their right to cancel policy within cooling off periodS

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9
Q

Statutes covering insurance companies

A

Financial Services and Markets Act 2000 and Financial Services Act 2012

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10
Q

Insurable interest

A
  • Subject matter of insurance
  • policyholder must have financial or economic interest
  • must be of current interest
  • must be of legal interest
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11
Q

Why is insurable interest required

A
  • Reduced moral hazard
  • discourage wagering
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12
Q

Insurable interest in Marine Insurance

A

Marine Insurance Act 1906 - policies void in absence of insurable interest

Insured must have interest in subject matter at time of loss

No need for insurable interest when contract is made

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13
Q

Life Assurance Act 1774

A
  • Person benefitting from insurance must have insurable interest in the life - No II = void contract
  • Name of beneficiary must appear in policy
  • Insured can recover no more than the value at interest
  • Insurable interest required only at inception
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14
Q

Gambling Act 2005

A

Contract that relates to gambling shall not prevent its enforcement - bypass the need to prove insurable interest on goods

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15
Q

Property contracts are

A

Contracts of indemnity

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16
Q

Premiums under a void conract

A

Typically premium is recoverable

Policies under life assurance act 1774 void = illegal therefore premiums are not recoverable

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17
Q

Insurable interest bill Nov 2022

A
  • Only applies to life / life-related policies
  • Life insurance is void unless at the time the insured enters the contract
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18
Q

Limited interest in property

A

Can insure the property for it’s full value

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19
Q

Insurable Interest on life policies

A
  • Own life
  • Spouse
  • Business relationships:
    1. Partners - insurable interest up to amount of any loss / expense from death
  1. Employer and employee
    - Employee can insure the life of their employer limited to salary
    - Employer has insurable interest in employee limited to value of work
  2. Credit and debtor
20
Q

Insurable interest at common law

A

interest is automatically assumed (each person presumed to have unlimited interest in their own life)

21
Q

Insurable interest through contract

A

agree to accept responsibility for something which they would not ordinarily be liable for

22
Q

Misrepresentation: False statement must be

A
  1. One of fact
  2. Made by party to the contract
  3. Material
  4. Induce the contract
  5. Cause loss or disadvantage to who relied on it
23
Q

Material Fact

A

Prudent insurer would deem material rather than opinion

24
Q

Innocent or fraudulent misrepresentation

A

Non - Consumer contract: Insurer may seek remedy regardless

Consumer: Insurer can seek remedy if negligent or fraudulent

25
Q

Caveat Emptor

A

Let buyer be aware

26
Q

Positive duty of disclosure

A

Going beyond duty not to misrepresent (Business insurance)

27
Q

Agent breaches duty

A

Business contracts insurer can seek remedy if agent misrepresent

28
Q

Material facts

A

Business insurance: Disclose all facts / circumstances material to the risk

29
Q

Actual inducement test

A

Statutory test for a remedy for breach of duty of fair presentation

30
Q

IA 2015 remedy available for breach of duty of fair presentation if

A
  • Not entered contract at all
  • Would have entered contract on different terms
31
Q

Material Circumstances

A
  1. Special or unusual facts about risk
  2. Particular concerns which led insured to seek cover
32
Q

Common law matters requiring disclosure can be divided into

A

Physical hazard
Moral hazard

33
Q

Matters which NOT need to be disclosed

A
  • Matters of law
  • Lessen the risk
  • Facts known by insurers
  • Facts which the insurers ought to know
  • Info that is waived by insurers
  • Facts outside scope
  • Facts which inspection should have revealed
  • Convictions that are spent
34
Q

Duration of duty

A

CIDRA & IA: begins at commencement of negotiations and ends when contract is formed

35
Q

Positions at renewal

A

Duty of disclosure is revived at renewal

Long-term contract: No duty of disclosure at renewal

36
Q

Fraudulent claims

A

IA: forfeit any claims, repudiate contract, burden of proof of fraud sts with insurer

37
Q

Remedies for fraudulent claims

A
  • not liable to pay claims
  • recover any sums paid iro to claim
  • treat contract as terminated
38
Q

Qualifying breach of duty of fair presentation of risk (business)

A
  • Insurer would not have entered the contract
  • Or would have done so on different terms
39
Q

Contracting out

A

If there is a disadvantageous term

40
Q

CIDRA and Deliberate / reckless Misrepresentation

A

Avoid contract and keep premiums paid unless it would be unfair to keep

41
Q

CIDRA and careless misrepresentation

A
  • Avoid policy, refuse claims, return premium
  • Treat contract with new terms or reduce claims paid if they’d charge higher premium
42
Q

Marine contract and utmost good faith

A

If utmost good faith not done by either party, contract can be avoided by other party - MARINE

Insurers can lose the right to avoid policy if lack of utmost good faith

43
Q

ICOBS rules

A

Insurer must not unreasonably reject a claim

Unreasonable: Non-disclosure could not reasonably be expected to have disclosed material fact

Non-negligent misrepresentation of material fact

44
Q

Non consumer breach remedies

A

Deliberate = avoid contract and keep premiums paid

innoccent = avoid contract and return premiums

45
Q

Consumer breach remedies

A

Deliberate = avoid the contract

Inoccent = keep policy in place but the terms they would have had it if there was no breach. if they wouldn’t write it then avoid contract and refuse all claims

MO5 (9 decks)

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