Chapter 8 Flashcards
What is a challenge for the claims team?
Fraudulent claims (detection and avoiding paying out)
What is the controlling principle for claims?
Indemnity -putting the insured back to the financial position they were in prior to the loss
What are exceptions to privy of contract (only the person who made the policy can claim under an insurance policy)
Assignment
Agency
Trusts
Statutory exclusions:
Road Traffic act -
Third Parties Act 2010
Law of Property Act 1925
Fires Prevention Act 1774
The Contract Act 1999 - a third party can claim if:
The contract provides they may do so
The contract purports to confer a benefit to the third party
But these needs to be intended by the policy
Third party claim under the road traffic Act 1988
If no insurance a direct claim to Motor insurer bureau.
Otherwise, named drivers and others are able to drive the car, the victim of a road traffic accident can make a direct claim to the insurer
Third Parties Act 2010 - right to a third party claim under an insurance policy?
money payable under the liability of an insolvent party is added to their list of assets.
Therefore if there is large debt to total assets, the accident victim may only receive a proportion of there claim.
Law of Property Act 1925 - third party right to claim under an insurance policy?
The benefit of insurance effected by vendor of real estate is automatically assigned to the purchaser.
Therefore any insurance money received by the seller must be paid to the buyer on completion.
Fires Prevention Act 1774 - third party rights to claim?
A person who has a legal or equitable interest in buildings (lessee, mortgagee etc) to compel the owner of the insurance to reinstate the building if it is damaged or destroyed in a fire.
What does an insured need to do regarding a claim?
Give notice of a loss and often give notice of an incident which may arise to a claim
Do the Insured have a time limit for notification of a loss?
There can be a time limit and if the insured fails to comply the insurer may, if a conduction precedent to liability, have the right to deny liability for the loss.
For compulsory classes, insurers cannot deny based on this breach
Where does the burden of proof lie for coverage of loss?
The insured to prove the loss was by a covered peril and also the amount of loss.
To Discharge the burden of proof, what must the insured establish?
The loss was caused by an insured peril
The amount of his loss
What are the ICOBS rules for handling claims?
- Handle claims promptly and fairly
- Provide reasonable guidance to help a policy holder make a claim and appropriate information for progress
-not unreasonably reject a claim - settle claims promptly once settlement has been agreed
Damages for late payments for an insurer?
Originally this was just interest
BUT, it is the insurer breaking their contract,
The Enterprise Act 2016 allows the court to award damages for late payment where the insurer has acted unreasonably
What are the problems faced with Causation?
- it can be difficult to separate the effects of a peril which is insured vs one which is excluded.
The operation of an insured peril may result in other forms of damage (Water to put out the fire)
Doctrine of proximate cause is codifies in the Marine Insurance Act 1906
An all risk policy, when are things excluded?
If specifically mentioned otherwise automatically included.
Where does the burden of proof lie on what caused the loss
The assured
Leading authority for proximity of cause
House of Lords decision
Leyland shipping v Norwich Union fire
Ship damaged by a torpedo then sank due to a storm.
Torpedo is uninsured peril (war) but sinking is a peril of the sea
What’s a concurrent interdependent cause?
More than one event causes the loss and they are 50%\50% responsible
If one is insured and the other isn’t, the insured prevails
The burden of proof for named peril vs all risk
Named - the insured
All risk - no burden of proof required
Efforts to avoid or reduce loss
Insurance policies usually require the insured to take reasonable precautions to avoid loss or damage. Damage to the subject matter insured should be distinguished from costs incurred by the insured to prevent or minimise an insured loss
Are you allowed to claim prevention costs?
No the English courts have refused to allow recovery for mere prevention costs unless the policy says otherwise.
Marine insurance policies usually contain a sue and labour clause which entitles the insured to claim expenses incurred to prevent or minimise the losses
What are the four types of fraud involved in claims?
Falsification of a loss
Deliberate loss
Exaggeration of a loss
Lying about the circumstances of a genuine loss
Requirements to establish fraud
It’s a criminal act and we have prove the case beyond a reasonable doubt
Remedies for insurers
Insures is not liable to pay the claim
When making a claim what two things must the insured prove for the insurers to be liable?
Caused by an insured peril
Amount of the loss
What degree of proof applies in the case of an insurance claim with regards to what caused the loss?
Proof on the balance of probabilities
Do insurance policies cover losses caused by negligence?
Generally yes even if precautions unless deliberate or reckless
In the context of proximate cause what is an uninsured peril
A peril not specifically insured or excluded by a policy covering named perils only
What is a remote cause
A cause which plays only a small part in bringing the loss
What was the impact of versloot dredging decision
Harder for insurers to use the fraudulent device defence - claim is no longer forfeited If genuine and exaggerated. Instead the insurer has to prove the lie is relevant
If an insured is found to have committed a fraud during a claim what action can the insurer take with respect to the insured policy, the claim and any other claim they have made
S12 of IA2015
Refuse to pay the claim
Recover any sums paid
Treat the contract as terminated from the fraudulent act
Can refuse any claim after but not before
Does not need to return the premium
