Chapter 8 - Making the claim

Question 1

Other than the person who purchased the insurance contract, who else can claim?

Answer 1

• Assignment - the original party transfers their rights to someone else who stands in their place.
• Agency - A third party who gains the right to claim on an insurance policy under the rules of agency.
• Trusts - Someone establishes a trust for the benefit of another i.e. life cover.
• Road traffic act
  -Third Parties act 2010
• Law of property act 1925
• Fire preventions act 1774
• Policies with additional interests - Liability contracts etc
• ‘Noting the interest’ of third parties

Question 2

What is the third parties act of 2010?

Answer 2

The Act removes the need for multiple sets of proceedings by allowing the third party to issue proceedings directly against the insurer and resolves all issues (including the insured’s liability) within those proceedings

Question 3

What is notice and proof of loss?

Answer 3

When a loss occurs the insured will always be required by condition to give notice of the loss

Question 4

What are the typical time limits for notification?

Answer 4

• A specific time limit - needs to be met
• If notification is a mere condition, the insured will be indemnified.
• If a breach of condition, the insurer can make a deduction reflecting the prejudice.

Question 5

What is meant by burden of proof?

Answer 5

Responsibility of the insured to prove whether or not a policy afford coverage for a loss by establishing that it was a covered peril.

Question 6

How does an insured discharge the burden of proof?

Answer 6

• peril must be covered
• Amount of the loss

These things must be established by the insured ‘on the balance of probabilities’.

Question 7

Who is responsible for proving an exclusion exists within a policy?

Answer 7

The insurer

Question 8

What is meant by ‘the loss must be fortuitous’?

Answer 8

The loss must not be caused deliberately by the insured or brought about by the insured’s own wilful misconduct. In these circumstances, the loss will not be recoverable under the
insurance policy.

Question 9

What are the issues relating to causation?

Answer 9

• In some cases it may be difficult to separate the effects of a peril which is insured (e.g. fire), from the operation of another peril which is excluded (e.g. earthquake), because the two are linked together in some way.
• In other cases the operation of a peril that is insured (such as fire) may result in damage of a different sort (e.g. damage by smoke, or water used to put out the fire, or looters who take advantage of the chaos in order to steal).

Question 10

What is the proximate cause?

Answer 10

the ‘direct’, ‘real’, ‘immediate’, ‘dominant’, ‘operative’ or ‘efficient’ cause of the loss.

Question 11

What is a remote cause?

Answer 11

causes which play only a small part in bringing about the loss. These are
generally described as remote causes – a ‘remote cause’ being more or less the opposite of a proximate cause.

Question 12

What are losses called when they arise from a series of events which are spread over time?

Answer 12

Concurrent events

Question 13

What is the difference between ‘all risks’ and ‘named perils’?

Answer 13

All risks is full cover unless otherwise stated whereas named perils covers specifically what is stated?

Question 14

What are the four types of fraudulent claims?

Answer 14

• Falsification of loss
• Deliberate loss
• Exaggeration of a loss
• Lying about the circumstances of a genuine loss

Question 15

Who has the burden of proving fraud?

Answer 15

The insurer has to prove the person committed fraud on the balance of probabilities

Question 16

What is meant by fraudulent device?

Answer 16

the term ‘fraudulent device’ refers to
fraudulent statements that are designed to increase the likelihood of a claim being paid out, where the underlying claim may be genuine (and valid under the policy).