Chapter 5 - Part 2 Flashcards
Which act is the definition of material fact found?
Marine Insurance Act 1906
What are some examples of physical hazards?
Construction, nature of use, heating, electrical systems
What are some examples of moral hazards?
Criminal convictions, lack of good management, excessive, careless, IVa’s/poor financial health
What does the Insurance Act 2015 state about material circumstances?
A circumstance or representation is material if it would influence the judgment of a prudent insurer in determining whether to take the risk and if so, on what terms
What does LASPO stand for?
Legal Aid, Sentencing and Punishment of Offenders Act 2012
Which act did the Legal aid, Sentencing and Punishment of Offenders act 2012 amend?
Rehabilitation of Offenders Act 1974
What did the Legal Aid, Sentencing and Punishment of Offenders Act 2012 change?
The rehabilitation periods now contains a buffer period after a custodial sentence.
What is the buffer period for a sentence length of 0-6 months?
2 years
What is the buffer period for a sentence length of 6-30 months?
4 years
What is the buffer period for a sentence length of 30 months - 4 years?
7 years
What is the buffer period for a sentence length of over 4 years?
Never “spent”
What is the buffer period for a Community order & Youth rehabilitation order ?
1 year
What is the buffer period for a fine?
1 year (from date of conviction)
What is the buffer period for Conditional discharge, referral order etc.?
Period of order
When does the buffer period begin?
from the end of the sentence
Are any claims payable if a policy is Ab Inito?
No claims will be payable
True of false - Non-negligent misrepresentation of a material circumstance by a consumer will be considered unreasonable grounds for refusing to pay a claim.
True
Would a claim be paid out for theft if the proposer told the insurer prior to inception that the premises are protected by a burglar alarm when they are not?
Most likely no as this is a clear misrepresentation based on a fact not an opinion.
What does CIDRA stand for?
Consumer Insurance (Disclosure and Representations) Act 2012
What would qualify as a qualifying misrepresentation by the consumer?
If the representation in deliberate or reckless or careless and the consumer knew that is was untrue or misleading and knew that the matter to which the misrepresentation related was relevant to the insurer
What will the insurer do if a qualifying representation is found to be deliberate or reckless?
They may avoid the contract and refuse all claims; and can keep any premiums paid, unless it would be unfair to the consumer to retain them.
When is a qualifying misrepresentation careless?
If it is not deliberate or reckless
What will an insurer do if a qualifying misrepresentation is found to be careless?
then the insurer will be able to apply a compensatory remedy. This would be based on what the insurer would have
done if it had known the correct information, such as
applying a relevant exclusion,
refusing to offer terms at all
or applying an increased premium.
What is the consequence of a breach of the duty of fair representation in a non-consumer contract?
Unless the insurer has contracted out of the duty to make a fair presentation of the risk an insurer will only be able to avoid a policy if the insured has made a deliberate or reckless breach. In other cases the insurer will have to respond more proportionately.
What are the two category’s the trigger a qualifying breach?
• deliberate or reckless; or
• neither deliberate nor reckless.
What happens if the insurer would not have entered into the contract at all and there was a breach that was not deliberate or reckless?
They can avoid it and refuse all claims – but they must return the premium.
What happens if the insurer would still have entered into the contract but with different terms (not related to the premium) and there was a breach that was not deliberate or reckless?
Then the contract will be treated as if those terms applied unless the insurer chooses not to apply them
What happens if the insurer would still have entered into the contract but with a higher premium and there was a breach that was not deliberate or reckless?
Claims can be reduced proportionally.
x = premium actually charged / higher premium ×100
A motor insurer agreed to accept an insurance proposal for a risk where the proposer did
not disclose driving convictions as he mistakenly thought they were spent. The premium
charged was £590, but had the insurer known about the conviction the premium would
have been £720.
The insured’s vehicle was damaged, and he made a claim. The cost of repairs was £300.
How much would the insurer pay for the claim?
divide the premium charged (£590) by
the amount the premium should have been (£720) times 100.
This equals 81.94%.
So the adjusted claim amount is 81.94% of £300, or £245.82.
IA 2015 refers to material terms as being terms of the contract which, if complied with, would tend to reduce the risk of one of more of what?
• particular kinds of loss;
• losses at a particular location; and
• losses at a particular time.
What are the rules of disclosure in regards to compulsory motor insurance?
The insurer must pay compensation for injury and property damage for third party claims then claim back the amount from the insured.
