Chapter 8- Makinf The Claim Flashcards
What fundamental change has the contracts rights of third parties act 1999 brought about
It provides a third-party can import contractual term if
The contract provided they may do so
The contract purports to confer a benefit on a third party
Sometimes a person who insures is deemed to have established a trust for the benefit of a third-party what sort of insurance as it frequently arise with
Life insurance where a person insures their own life but does so expressly for the benefit of another
What two distinct advantages are there in the trust can be established
On the death of the insured the policy money goes directly to the beneficiary and is not counted as part of the insureds estate
If the insured becomes bankrupt the beneficiary can usually claim the policy number without being subject to the claims of insureds creditors
What Four ways can there be a number of statutory exceptions to the doctrine of privity of contract
Road traffic act
Third parties act
Law of property act
Fires prevention act
Motor insurance policies are different why
Because they often cover person is open and the policyholder including various named drivers or any person who drives insured vehicle without the policyholders permission
Under the Road traffic act is a requirement in insurable interest there
A policyholder can claim an indemnity on behalf of any additional drivers and the requirement to be sure that interest is deemed to be waived
What is the effect of The doctrine of privity of contract under the Road traffic act
The effect is to allow persons open than the policyholder to enforce the policy directly although they were not party see original contract
What is another exception to the doctrine of privity of contract under the Road traffic act
It allows the victim of a road accident to make a direct claim against the motor insurer of a negligent driver who caused the accident
Under the Road traffic act what two ways are there the right to make a direct claim under section 151 of the doctrine of privity act
The accident victim had obtained a judgement against a negligent driver
The driver has failed to satisfy the judgement within seven days
Under the third parties act privity to the contract what happens
The rights of an insolvent insured to an indemnity from the insurers under a liability policy were transferred to a third party claimant
What is the doctrine of privity under the third parties act
It’s allowed the victim to bring a claim directly against liability insurers for passing the insured and insured of a creditors should they become insolvent
Under the doctrine of privity of contract what is the law of property act
The benefit of any insurance affected by the vendor of houses is automatically assigned to the purchaser if at exchange of contracts the property is damaged
What happens with policies with additional insureds?
Insurance policies particularly liability insurance often grant an indemnity to persons other than the main insured what is usually a company
What is the burden of proof
The policy may state that the insured must give full particulars of the loss or Provide such proofs and information as my reason to be required
Who does the burden of proving for loss remain with
The insured and it is obviously in their best interest to complete the claim form to provide as much information and cooperate with insurers in investigation of a loss
To discharge the burden of proof insured must be able to establish two things
But the loss was caused by an operation of an insured peril
The amount of the loss
What must be established by the burden of proof
It must be established by the insured on the balance of probabilities
What does it mean when it says the loss must be fortuitous
The loss must not be caused deliberately by the insured or brought about by the insureds own wilful misconduct
Under composite insurance does wilful misconduct by one coinsured prejudice the other
No they don’t usually prejudice the right to claim of an innocent coinsured
What an claim deliberately/ intentionally caused by a member of the insureds family or their employees be covered
Yes as long as the insured had no involvement in their actions
What is a reasonable precautions clause
Where insurers seek to avoid liability for losses caused by excessive carelessness
What is this an example of
You must take all reasonable care to protect the property Insured prevent loss or damage and prevent accident or injury
A reasonable precaution
What is it an example of
The insured shall take all reasonable steps just get safeguard from loss or damage and maintain in efficient condition any motorcar for which indemnity is granted
Reasonable precaution
Do English courts like the reasonable precaution clause
No they are rather reluctant to enforce conditions of this sort
What happens reasonable precautions clauses on the liability insurances
I have generally been in forced only in the case of reckless conduct by the insured. Where conduct where the insured is not merely careless but deliberately takes an orbit and unjustified risk. It seems that the courts now take a similar attitude with property insurance claims
Where does the burden of proof for the reasonable precautions clause lie
The burden of proof rests on the insurer for reasonable precautions
The claims handling rules under ICOBS require insurers to do what
Handle claims promptly and fairly
Provide reasonable guidance to help someone make a claim
Not unreasonably reject the claim
Settle claims probably want to settlement has been agreed
Under the insurance act and the enterprise act what law reform came in for damages for late claim payments
It made it an implied term under the insurance contract that the insurer must pay any sums due in respect of a claim within a reasonable time
What happens if an insurer doesn’t pay a claim within a reasonable time
It’s It will result in contractual damages in addition to the sums due under the policy and any interest on those sums
What are the two problems in relation to causation
It can be difficult to separate the effects of a peril which is insured
The operation of a panel that is insured may result in a damage of a different sort
Why is an all risks policy different
Any peril that is not specifically excluded is automatically an insured peril and there is no third class of insured peril
In looking for the proximate cause insurance law has traditionally assumed that
It can be identified as the most powerful in bringing about the loss
Who must proximate cause be understood by
Understood by the man in the street
What happens in a chain of events when the loss flows in an unbroken chain directly from an insured peril
Insurers are liable
What happens in a chain of events where The lost flows directly from an excluded peril
There is no liability for loss
Why have the English court refused to allow recovery for mere prevention costs (not damage to subject matter itself but expense incurred to prevent damage because the subject matter)
Because it is not an implied term that the insurer would indemnify the insured expenses incurred to prevent a loss
What policies contain a sue and labour clause which in total is insured to claim expenses incurred to prevent or minimise insured losses
Marine insurance
Who is the burden of proof on to prove that an insured peril was approximate cause of a loss
The insured
What does this relate to
In the case of fire insurance the insured was proof that the property has been burned or in the case of theft insurance that it has been stolen stolen
The burden of proof
What happened to the burden of proof when insurance is written on an all risks basis
The insured does not have to prove the operation of any specific peril And need to only prove that the loss was accidental
What happens when the insured has established the burden of proof
It now shifts to the insurer. If they wish to reject the claim they must prove that an excepted peril was approximate cause. They may also shift the burden of proof by requiring the insured to prove that the loss was not caused by an excepted peril
What is the standard of proof in the case of insured or excepted perils
The proof on a balance of probabilities
What are the four types of fraudulent claims
Falsification of a loss i.e. the insured make the claim when They haven’t suffered a loss
Deliberate loss i.e. when They deliberately cause a loss
Exaggeration of a loss i.e. when They exaggerate the amount of a loss
Lying about the circumstances of a genuine loss to improve the chances of a claim being paid (also known as fraudulent device)
What does the fraud act determine that a person is guilty of a criminal offence of fraud if they do what
Dishonestly make a false representation
Dishonestly failed to disclose to another person information which he or she is enjoy duty to disclose
Dishonestly abused their position
For criminal prosecution of fraud to succeed what must the prosecuting body determine
It will need to meet the criminal standard of proof i.e. the case beyond a reasonable doubt
For a civil prosecution what most insurers do to prove a fraudulent claim
Need to meet the civil standard of proof which requires that they establish that the person committed fraud on the balance of probabilities
What is a fraudulent device
It refers to Fraudulent statements that are designed to increase the likelihood of a claim being paid out
What happens if there is a fraudulent device
If the fraud is established the insured would forfeit their claim
What happens if the insured makes a fraudulent claim
The insurer is not liable to pay the claim. It can recover any sums paid in respect of a claim And could treat the contract has been terminated with effect on the time of the fraudulent act
Even insurer terminate the contract because of a fraudulent claim do they have to return any premiums paid
No and it can also refuse to pay any claims arising after the time of fraudulent act
What happens in a case of group insurance for example employers liability when one person makes a fraudulent claim
This does not have an affect on other employees who are insured under the same policy and whose claims were not fraudulent
What happens for personal injury claims where a part of a claim is found to be fundamentally dishonest
The entire claim should be struck out by the court
What happens under the proceeds of crime act 2002 when somebody has committed fraud
Where somebody has committed fraud has been convicted, a confiscation order can be made to recover the assets that have been fraudulently obtained an insurer which is paid out of fraudulent claim may be able to recover their money
