Chapter 5 - Topic test

Question 1

What is the definition of utmost good faith?

Answer 1

“Is a positive duty to voluntarily disclose, accurately and fully, all facts material to the risk being proposed whether requested or not.

Question 2

To whom does the principle of utmost good faith apply to?

Answer 2

Both the insurer and the insured.

Question 3

How can insurers alter the common law position regarding the timing of disclosure?

Answer 3

Upmost good faith begins at both the inception and the revival of renewal.

Question 4

What is a material fact?

Answer 4

Marine Insurance Act 1906 “ Every circumstance is material which would influence the judgement of a prudent insurer in fixing the premium or accepting the risk.

Question 5

Three examples of moral hazard?

Answer 5

1. ) Previous refusals of insurance history
2. ) Previous claims history
3. ) Poor management of business’s

Question 6

Which material facts do not need to be disclosed?

Answer 6

• Facts that ought to be known to an insurer

- Facts that would reduce the premium.

Question 7

When one party breaches the duty of disclosure what is the result?

Answer 7

The policy can be made void. Or the insurer is entitled to refuse to pay for claims.

Question 8

What is the difference between non-disclosure and misrepresentation?

Answer 8

Non disclosure is failing to reveal a material fact.

Question 9

How must the proposer present there duty of disclosure in regards to fair presentation:

Answer 9

• Every material representation is a matter of fact
• Given in a matter which is clear and accessible to the prudent insurer.
• Every material representation is to a matter of expectation or belief and is made in good faith.