Chapter 5- Insurance Contract Formation And Insurable Interest Flashcards
When will And insurance contract come into existence
Well the offer made by one party is on conditionally excepted by the other
If The insured does not receive the renewal notice can I accept the offer of temporary cover which it contains
No
If the insured just received the renewal notice how is it deemed
But they have accepted the offer if they simply continue to use the car on the road
Insurance what three things that the parties have reached agreement on
The subject matter of the risk
The duration of the contract
The amount of the premium
What happens when insurance contract is renewed
A fresh contract is formed normally on the same basis as the old one
At renewal is offer and acceptance required
Yes the renewal notice which insurer issues can be regarded as an offer which the insured can accept by payment of the premium
The risk may fail to run resulting in a total failure of consideration for what four reasons
The proposal may be withdrawn at the premium has been paid
The policy may be polite mistake because there is no consensus ad idem
The policy may be void because no insurable interest
The policy may have be avoided ab initio
In all these cases they must allow a full return of premium unless there has been fraud
What insurance contracts that must be in writing
Marine insurance act
What insurance contracts need to be evidenced in writing
Contracts of guarantee
What insurance contract is written documentation required
Motor insurance (certificate of insurance)
Is an insurer who grants cover to a minor fully liable to meet all valid claims
Yes, but an insurer can’t enforce an insurance contract against a minor by suing them for the premiums owed unless it’s a contest for necessaries (motor insurance)
What is insurable interest
The legal right to insure arising out of a financial relationship recognised at law between the insured and the subject matter of insurance
What are the key elements of insurance interest
The subject matter of insurance
Economic/ financial interest
Current interest
Legal interest
Why does the law require insurable interest
To reduce moral hazard
To discourage wagering
What two ways can creating of insurable interest arise
Under common law- where insurance interest if automatically presume to exist
Under contract- where a person will agree to accept responsibility for something for which they wouldn’t be originally liable (landlord/ tenant)
Under marine insurance, when must insurance interest be required
At the time of the loss
What are the main four provisions in the life assurance act
The person Benefiting from insurance must have an insurable interest
The name of the person whose benefit the policy has been affected must appear in the policy
The insured can recover no more than the amount of the value of interest
The act does not apply to insurances on ships goods or merchandises
What is the gaming act
Made all contracts by way of gaming or
Wagering void
What does it mean when property insurances a contract of indemnity
The insured cannot in any case recover more than the amount of their actual loss unless the insurance agreed to provide insurance on a more generous basis
What happens if there is no insurable interest
The contract is generally void
What happens if a contract is void because of no insurable interest
The policyholder who was paid a premium for avoid insurance policy should be able to recover it and payments made by an insurer under such a policy should also be recoverable.
However as life insurance is an illegal contract if there is no insurable interest the insured as a matter of law may not be able to recover the premium that it has paid
What insurable interest do partners have in business
An interest in each other’s lives of the amount of any loss or expense that may arise on the death of a partner
What insurable interest do employers and employees have
Employee can insure the life of their employer however their interest is limited to a sum representing their wage or salary
And employer had an insurable interest in a lot of their employee. Limited to a sum representing the value of the work to which the employer is entitled
What is insurable interest for a creditor
Accreditor as an insurable interest in the life of the debtor because They may lose financially if the debtor dies before the money is repaid. They can insure for the amount of the debt plus interest payable on it
What is the insurable interest of a debtor
A debtor has now corresponding insurable interest in the life of their creditor
There are many examples of persons who have an insurable interest in property such as the following
Out right owners of property Part or joint owners Mortgages and mortgagors Executed and trustees Landlord and tenant Bailees People living together Finders and people in possession
