Chapter 8 - Making a claim LO7

Question 1

Contracts (Rights and third parties) Act 1999

Answer 1

3rd party can enforce contractual terms if:
- the contract provides they may do so
- contract purports to confer a benefit on 3rd party

Question 2

What is meant by undisclosed principal not being able to ratify contract in terms of 3rd party

Answer 2

3rd party can ratify contract only if they are named in it as the insured

Question 3

Advantages if trust can be established for life insurance

Answer 3

• Policy money goes straight to beneficiary, not counted as part of insured’s estate
• If insured becomes bankrupt, beneficiary can claim policy money without subject to claims of creditors

Question 4

Which acts have statutory exception to the doctrine of privity of contract (5)

Answer 4

• RTA 1988
• Third parties (Rights Against Insurers) Act 2010
• Law of property
• Fire Prevention (metropolis) act 1774

Question 5

Where can negligent driver has no insurance where can claim be made?

Answer 5

Moto Insurer’s Bureau (MIB)

Question 6

RTA & privity of contract exception

Answer 6

• Allows persons other than policyholder (someone who is permitted to drive) to enforce the policy directly.
• Victim of accident can make direct claim against insurer of the driver

Question 7

Third parties (Rights Against Insurers) Act 2010 & privity of contract exception

Answer 7

Insolvent parties assets can be taken if there is money payable under the policy

Question 8

Law of property & privity of contract exception

Answer 8

Benefit of insurance effected by the vendor or real property is assigned to the purchaser if, after exchange of contracts, property is damage or destroyed

Question 9

Fire preventions (metropolis) & privity of contract exception

Answer 9

person who has legal or equitable interest in buildings, to compel insurers to reinstate (rebuild) property if damaged by fire

Question 10

Notice and proof of loss

Answer 10

When loss occur insured will always be required, by policy condition to give notice of loss

Question 11

Notification clause (time limit) for claim and don’t claim within time frame

Answer 11

Condition precedent to insurer’s liability = Deny liability for the loss
Mere condition = Indemnify insured, claim for damages by making a a slight deduction

Question 12

Burden of prrof

Answer 12

Proving the loss to insurers

Question 13

When can burden of proof be discharges (2) which can be established by the insured on the balance of probabilities

Answer 13

• Loss caused by operation of insured peril
• Amount of loss

Question 14

Deliberate acts from others apart from policyholder covered?

Answer 14

Yes, intentional damage by family member for e.g will be covered provided insured has no involvement

Question 15

ICOBS rule - handling claims

Answer 15

• Put restrictions to avoid claims made by insurers
• Handle claims promptly and fairly
• Provide reasonable guidance to help policyholder make claims
• Not to unreasonably reject claim
• Settle claims promptly once settlement has been agreed

Question 16

Enterprise act 2016

Answer 16

Allows court to award damages for late payment, where insurer acted unreasonably

Question 17

Proximate cause

Answer 17

The dominant cause of a loss

Question 18

What happens if loss arises form insured and uninsured peril?

Answer 18

Insured peril prevails, loss is deemed to happen from insured risk

Question 19

What happens if loss arises form insured and Excluded peril?

Answer 19

Exclusion prevails

Question 20

Independent Perils

Answer 20

Each peril would’ve caused some loss on its own

Question 21

Interdependent perils

Answer 21

Neither perils would cause a loss on its own

Question 22

If insurers want to reject claim on all risk

Answer 22

The burden to prove loss by insured peril shifts to insurers

Question 23

Modification of proximate cause

Answer 23

Exclude losses arising ‘directly or indirectly from wat’

Question 24

Types of fraud involved in claims (4)

Answer 24

1. Falsification of loss
2. Deliberate loss
3. Exaggeration of loss
4. Lying about circumstance of genuine loss (fraudulent device = increase liklehood of claim to be paid out)

Question 25

Fraud Act 2006 - person is guilty of criminal offence if (3)

Answer 25

• Makes false representation
• fails to disclose info which they have duty to disclose
• abuses their position

Question 26

remedies for insurers IA 2015

Answer 26

• Insurer not liable to pay claim, treat contract as terminated and recover sums paid iro of fraudulent claim

Question 27

remedies for insurers Employers Liability Act 1969

Answer 27

Does not effect other employees contract even if it is terminated for that specific employee