Chapter 6 Questions

Question 1

give an example of a consumer insurance contract

Answer 1

insuring a vintage motorcycle

Question 2

what does misrepresentation include

Answer 2

a point of fact
something that the other party relied upon when entering the contract
something material to the contract

Question 3

Under the Insurance Act 2015, a company wishing to effect an insurance contract is required to disclose anything

Answer 3

known by the insured’s senior management

Question 4

An insurer has received a burglary claim for £20,000. If it transpires that £16,000 of this was genuine and £4,000 is fraudulent, what action is the insurer most likely to take

Answer 4

It will repudiate the whole claim and terminate the policy

Question 5

A claim on a business insurance policy has revealed that there was a deliberate qualifying breach of the duty of fair presentation of the risk by the insured in the original application. The insurer is most likely to

Answer 5

avoid the policy and refuse to refund the premiums paid

Question 6

what two duties does the duty of fair presentation of the risk in non-consumer insurance impose on the insured

Answer 6

duty not to misrepresent any material fact
duty to disclose all material facts

Question 7

how does the law define a material fact in non-consumer insurance

Answer 7

standard definition is provided by s. 7(3) of the Insurance Act 2015
material if it would influence the judgment of a prudent insurer in determining whether to take the risk and, if so, on what terms

Question 8

in non-consumer insurance, in what two cases might there be a continuing duty of disclosure under a general insurance policy

Answer 8

where there is an agreed change in the contract during the period of insurance, insured has a duty to notify material facts which relate to the change
where a continuing duty is imposed on the insured contractually through a change/increase in risk clause incorporated in the policy wording