Chapter 7- Insurance Contracts And Key Terms Flashcards

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1
Q

What happens if there are inconsistencies in proposal forms/ insurance policies

A

An endorsement (ie a document or note recording a change in the insurance contract) is likely to overrule anything in the printed policy

A policy document will take precedence over a proposal form

An express term of the contract will overrule any implied term

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2
Q

What is a breach of pre contractual information duties

A

The breach normally arises from a failure to supply full and accurate information in the negotiations before the contract has come into existence

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3
Q

What is a breach of contract

A

The breach arises from a failure to comply with a term of the contract itself

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4
Q

What two ways are terms traditionally classified in the general law of contract

A

Conditions and warranties

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5
Q

In the general law of contract what is the effect of a breach of warranty

A

As it is only a minor term if it is broken the injured party has a right to claim damages but it’s not in general to treat the contract as repudiated

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6
Q

In the general law of contract, what happens if there is a breach of contrition

A

As it’s more of an important aspect of the agreement i.e. goes to the route the victim has a right not only to claim damages also to terminate the contract

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7
Q

What two principles of interpretations are used by the courts

A

Statutory roles i.e. rules laid down in legislation; and

common-law rules i.e. rules developed by the courts

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8
Q

Some statutory control of the interpretation of contracts is imposed by what

A

Consumers rights act 2015

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9
Q

Under statutory rules/ interpretation of context. Which make the following changes to consumer contracts

A

Removal of the requirement of the term must not have been individually negotiated before term could be challenged on the grounds that it was unfair

Prohibition from referring to either return the consumer contract or consumer notice to exclude or restrict liability for death or personal injury resulting from negligence

Provision neighbour and unfair term is binding on the consumer

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10
Q

What are the common law rules of interpretation of insurance policies

A

Ordinary meaning (the same as the literal rule that applies to the interpretation of statutes)

Technical or legal meaning

The importance of context

Ambiguity the contract profentem rule

Inconsistencies

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11
Q

Under common-law rules of interpretation of insurance policies what is the technical or legal meaning

A

Where the presumption is that words are intended to bear their common meaning may not apply if the word in question has a clearly established technical meaning

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12
Q

Under common law rules of interpretation of contract what is the importance of context

A

it a meaning is doubtful, the court will consider the immediate context and if necessary the wider context. Also known as the noscitur a sociss rule.

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13
Q

Under common law rules of interpretation of contract what is the contra proferentem rule

A

where words are ambiguous the clause is construed against the party who proposed it (i.e the drafter of the clause) so that the other party is given the benefit of the doubt

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14
Q

Under common law rules of interpretation of contract what happens under the contra proferentem rule with ambiguity

A

an ambiguous wording will generally be construed in favour of the insured.

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15
Q

what happens under the contra proferentem rule with ambiguity in the case where a broker is acting for the insured

A

if they put forward causes that he wants to incorporate in the policy, any ambiguity will be interpreted in favour of the insurer because the broker will be acting as an agent of the insured when proposing the clauses.

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16
Q

What is a warranty

A

Essentially a promise made by the insured relating to facts or to something which they agree to do

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17
Q

What is a continuing warranty

A

They are applied by insurers to ensure that some aspect of good housekeeping or good management is observed by the insured

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18
Q

What are these an example of:

Rubbish to be cleared up each night
The burglar alarm to be switched on

A

Continuing warranty

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19
Q

Other than good housekeeping what also would be a function of the continuing warranty

A

To ensure that certain high risk practices are not introduced without the insurers knowledge

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20
Q

What are these examples of:

that no inflammable oils may be stored

no work carried out a greater height than 12 metres

no woodworking should take place

A

Continuing warranty

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21
Q

Does a warranty have to be exactly complied with?

A

Yes, if cover is broken cover is suspended from the moment the warranty is breached until it is remedied- even if the breach did not cause the loss

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22
Q

What happens if a breach can’t be remedied i.e a ship sinks after the insured breaches the warranty

A

the insurer is not liable for any loss that occurs from when the warranty is breached until it is fixed.

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23
Q

Under breach of warranty are insurers liable for losses attributable to something that happened during the time that the insured breached the warranty?

A

No

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24
Q

What two ways can warranties be made?

A

Express warranties

Implied Warranties

25
Q

What is an express warranty

A

Where they can expressly stated in the policy itself. The court made decided that a term in a contract is a warranty even if they don’t use the word warranty

26
Q

What are the standards that the courts apply to determine whether or not a term which is not expressly stated is a warranty are:

A

Whether it goes to the root of the transaction

Whether the terms bears materially on the risk

Whether damages would be an adequate remedy for breach

27
Q

Under what policies can implied warranties be found in only

A

Marine insurance

28
Q

What are ‘basis of the contract’ clauses

A

used to convert the statements made by the insured in the proposal form into warranties.

29
Q

Under ‘basis of the contract clauses’ what did a reference in the contract to the effect of ‘all the statements made by the insured in the proposal form are the basis of the contract’

A

that it is sufficient to render the statements as warranties.

30
Q

Is it possible to create an insurance warranty by ‘basis of the contract clauses’

A

No the insurance act abolished them

31
Q

What is a condition precedent to contract

A

It’s one which states that the policy will not come into effect if the insured failed to comply with the term in question

32
Q

What is it an example of

A life insurance policy may contain a condition that the policy will not come into effect until the premium is paid

A

A condition precedent to the contract

33
Q

What is a condition precedent to liability

A

It allows insurers to discharge themselves from liability for a particular loss if a term is broken

34
Q

What is a collateral condition

A

Is regarded as a minor term a breach of which will still entitle the insured to make a claim under the insurance contract

35
Q

What happens if it is a serious breach of collateral condition

A

If it is that serious that it goes to the root of the contract the insurer may repudiate the contract

36
Q

Under collateral condition what is normally the case for a breach

A

The insurer will have to pay for the insureds loss but may claim damages

37
Q

What is this an example of

A clause in an employers liability policy which requires insured to keep a record of wages in a proper wages book

A

A collateral condition

38
Q

If A clause does not refer to the words condition precedent or does not contain some strong words such as the insurer will not be liable for the loss if the insured does not comply with condition what sort of condition would this be

A

collateral condition

39
Q

What is an exception clause

A

They excuse insurance from liability when the loss is caused by particular peril or when some other circumstances apply

40
Q

What is it an example of

A fire policy makes exclued fire caused by earthquake and a theft policy makes exclude theft of money or theft involving collusion by employee of the insured

A

An exception clause

41
Q

Can an exception clause be broken by the insured

A

No but they also do not place any obligation on the insured

42
Q

What is a suspensive condition

A

When cover is suspended during the period of the insured breached the clause and remedied the breach

43
Q

What is the difference between a suspensive condition and an exception clause

A

A suspensive condition is like exclusion and cover a suspended when not a day to wear an exclusion does not to spend, but simply narrows it

44
Q

What happened under a breach of warranty

A

The insurer has no liability in respect of any loss that occurs or is attributable to something that happens after a warranty has been breached but before the breach is remedied

45
Q

For a breach of warranty does the insurer have to prove a connection between the breach and any loss has occurred unless the warranty is intended to reduce the risk of a loss

A

No

46
Q

What happened for a breach of condition precedent to the contract

A

It is never fulfilled and the contract never comes into existence

47
Q

What happened if there is a breach of condition precedent to liability

A

The insurer is automatically discharged from liability for the claim which is tainted by the breach but the policy remains in force

48
Q

What happens if there is a breach of collateral condition

A

The remedy depends on the seriousness of the breach but in most cases the insurers are not entitled to reject the claim

If the breach is not serious enough to terminate the policy insurer cannot reject the claim and has to pay for the loss but in my claim damages

49
Q

What is a breach of a suspensive condition

A

Cover is suspended for as long as the insured fails to comply with a condition but resumes if and when they start to comply with it again

50
Q

What does a promissory Estopel mean

A

That an insured he was broken a warranty cannot enforce the contract unless they can prove that the insurers clearly indicated that they do not intend to rely on the breach of warranty as a defence to further liability under the policy

51
Q

What are examples of insurers actions that would support an argument of waiver by Estopel

A

Knowing of the breach, the insurers;

Issued a renewed the policy
Accepted further premiums
Advised the insured about future loss prevention
Resisted the claim on grounds other than breach of warranty

52
Q

Eva loss occurs and the term has not been complied with under terms not relevant to the actual loss can insure ever like a non-compliance to exclude limit or remove liability

A

No as it could not of increased the risk of a loss which actually occurred

53
Q

If an insured is required to maintain a burglar alarm system with in the insured property and they do not comply with this requirement and the property is damaged by flood would insurance be able to rely on the breach to deny liability

A

No

54
Q

Under the Road traffic act can insurers reject a third-party traffic accident victim claim by relying on certain types of policy condition or warranty

A

No

55
Q

For EL insurance can insure it reject the claim for breach of conditional warranty

A

No they can’t rejected on the grounds of late late notification or because the insured has failed to comply with policy the condition or the use of policy excesses

56
Q

What does it mean by joint policy is indivisible

A

A breach by one insured may cause a whole policy to fail

57
Q

What happens if I was a breach under a composite policy

A

It may invalidate their own cover without affecting the right of other insured persons to claim

58
Q

If the insured share a common interest in the subject matter what kind of policy would this be

A

A joint policy

59
Q

If the insured have different interest in the subject matter what kind of policy would this be

A

Composite policy