Chapter 6 - New Questions Flashcards
Which of the following criteria is NOT necessary for a false statement to constitute a misrepresentation affecting the validity of a contract?
The statement must be made with the intention of misleading the other party.
Which type of insurance allows an insurer to seek remedy for any misrepresentation—fraudulent, negligent, or innocent—regardless of intent?
Business insurance.
Which example best represents a fraudulent misrepresentation in insurance?
A proposer implies a previous fire at their home was the fault of contractors, when it was actually their own fault.
Which of the following statements accurately reflects the duty of disclosure in non-consumer (business) insurance?
The insured must disclose all material facts even if they are not specifically asked about them by the insurer.
According to the Insurance Act 2015, which of the following best describes how ‘knowledge’ is determined for the purpose of disclosure?
For a company, the knowledge of senior management or the person responsible for insurance is attributed to the insured.
Which aspect of the duty of disclosure under the Insurance Act 2015 is most similar to the traditional common law approach?
The duty to conduct a reasonable search and make inquiries about material circumstances.
In the case of non-disclosure, what must insurers prove to avoid the contract based on the ‘influence the judgment’ test?
That the non-disclosure would have led a reasonable insurer to decline the risk or impose a higher premium.
What is the ‘actual inducement test’ as applied by the House of Lords in Pan Atlantic Insurance Co. v. Pine Top Insurance Co. (1994)?
The test necessitates demonstrating that the actual underwriter was specifically induced by the non-disclosure to enter into the contract on the relevant terms.
In the context of non-disclosure and misrepresentation, what is the difference in the test for proving inducement?
For non-disclosure, it is what the insurer would have done if the true position had been disclosed, while for misrepresentation, it is what the insurer would have done if there had been no misrepresentation.
What is the significance of the ‘nexus’ question in the context of non-disclosure under an insurance policy?
It evaluates if the insurer’s right to avoid the contract depends on the non-disclosure being related to the loss claimed.
In Jones v. Zurich Insurance Plc (2021), how was the materiality of the misrepresented fact assessed?
It was embedded in the test of inducement, determining if the insurer’s judgment would have been affected by the misrepresentation.
According to the IA 2015, how can an insured meet the duty of disclosure even if they do not disclose a material circumstance directly?
By providing the insurer with enough ‘signposts’ that would lead a prudent insurer to make further inquiries which would reveal the material circumstances.
Under the IA 2015 and CIDRA 2012, how is the duty of fair presentation of the risk different from the duty of good faith?
The duty of fair presentation applies only at the pre-contractual stage, while the duty of good faith pertains to the entire contract period.
In the case of Manifest Shipping Co. v. Uni-Polaris Shipping Co. (The Star Sea), what was the significance of the insured’s failure to disclose reports on the vessel’s unseaworthiness?
The case highlighted that the failure to disclose reports of unseaworthiness did not breach the duty of good faith because the insurer could not prove knowledge.
In Galloway v. Guardian Royal Exchange (UK) Ltd, what was the outcome when part of a claim was found to be fraudulent?
The entire claim was forfeited, regardless of the portion that was genuine.
