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IF2 > Chapter 8 - Material Circumstances > Flashcards

Chapter 8 - Material Circumstances Flashcards

1
Q

Identify from the following which are perils and those which are hazards:

A) high value sports car
B) explosion
C) thatched roof for fire insurance
D) subsidence

A

A) hazard
B) peril
C) hazard
D) peril

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2
Q

What 2 things would effect the judgement of a prudent insurer in considering

A

A) whether or not to accept the risk

B) if willing to accept the risk; at what premium and on what terms and conditions

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3
Q

Consumer. The proposer has a duty to:

A

take reasonable care not to make a misrepresentation

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4
Q

No consumer. The proposer has a duty to:

A

Make a fair presentation of information relating to the risk of the insured

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5
Q

Which 6 things do not need to be disclosed:

A
  1. Circumstances that lessen the risk
  2. Circumstances that the insurer knows
  3. Circumstances the insurer ought to know
  4. Circumstances the insurer is presumed to know
  5. Circumstances where the insurer has waived its rights
  6. Circumstances that a survey would have revealed
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6
Q

What does the rehabilitation of offenders act 1974 as amended by the legal aid, sentencing and punishment of offenders act 2012 mean:

A

Depending on the period of time and upon the severity of the original sentence imposed convictions become spent and don’t need to be disclosed.

They are halved for those below 18 yrs of age at the DATE of the conviction except for custodial sentences of up to 6 months where the buffer period is 18 months

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7
Q

What are the following rehabilitation period for custodial sentence 0-6 months

A

Length of sentence+ 2 years

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8
Q

What are the following rehabilitation period for custodial sentence 6-30 months

A

Length of sentence+ 4 years

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9
Q

What are the following rehabilitation period for custodial sentence 30months - 4 years

A

Length of sentence+ 7 years

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10
Q

What are the following rehabilitation period for custodial sentence over 4 years

A

Never spent

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11
Q

What are the following rehabilitation period for non custodial sentence community order and youth rehabilitation.

A

Length of sentence+ 1 year

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12
Q

What are the following rehabilitation period for non custodial sentence fine

A

Length of sentence+ 1 year from date of conviction

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13
Q

What are the following rehabilitation period for non custodial sentence conditional charge

A

Period of the order

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14
Q

Disclosure of private individuals is covered by what

A

The Cidra

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15
Q

What is the CIDRA

A

Consumers are required to take legal care not to make a misrepresentation and the emphasis is on the insurer to ask the right questions in a clear way

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16
Q

Under CIDRA what happens if the misrepresentation was honest and reasonable

A

The insurer must pay the claim

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17
Q

Under CIDRA what happens if the misrepresentation was careless

A

The insurer can act as it would have done if the question had been answered correctly. I.e charge a higher premium, apply exclusion etc

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18
Q

Under CIDRA what happens if the misrepresentation was deliberate or reckless

A

The insurer is entitled to treat the policy as void and decline all claims

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19
Q

What is the Insurance Act 2015

A

To make a fair presentation of the risk involves disclosing every material circumstance which the insured knows or ought to know. Also makings fair presentation also means insurers need to take responsibility for asking questions and probing for info

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20
Q

Under the insurance act.. What should the insured know

A

A) knowledge held by the insureds senior management

B)what ought to be known

21
Q

Under the insurance act what info should the insurer be able to find within its own organisation

A

A) info held by the insurer and accessible to the underwriter
B) what an underwriter would be reasonably expected to know
C) that is common knowledge

22
Q

Under insurance act what is a qualifying breach

A

Where the insurer would not have entered into the contract at all or would have done it under different terms

23
Q

Under insurance act if the breach is deliberate or reckless what can the insurer do:

A

A) avoid th contact and refuse to pay the claims

B) need not return any of the premiums paid

24
Q

Under the insurance act what happens if the breach was not deliberate or reckless

A
  1. If the insurer wouldn’t have written the risk at all they can void the contract but must return the period paid
  2. If thy would’ve charged a higher premium it can proportionality reduce any claims payments
  3. If they would’ve added special terms they can but the insurer can’t seek to avoid the policy
25
Q

What is a peril

A

The event giving rise to the loss itself

26
Q

What is a hazard

A

The factor that might alter the frequency and severity of the peril occurring

27
Q

What is a physical hazard

A

Relates the the physical characteristics of the risk

28
Q

What are the physical hazards for fire insurance

A

A) construction of the building
B) provision of fire fighting equipment
C)trade processes

29
Q

What are the physical hazards for theft insurance

A

A) construction of the building
B) security feature
C) contents in the building

30
Q

What are the physical hazards for motor

A

A)age of the driver
B)make and model of the vehicle
C) place it’s kept
D)the use of th vehicle

31
Q

What are the physical hazards for EL

A

Industrial processed in a factory ie guarding of machinery

32
Q

What are the physical hazards for personal accident and sickness

A

A) proposers occupation

B) dangerous pastimes

33
Q

What is a moral hazard

A

It relates to the human aspects that may influence the outcome of the risk

34
Q

Name the most serious example of poor moral hazard

A

False or exaggerated claims

35
Q

What is a common example of poor moral hazard

A

Lack of care of the insured ie lack of regard for employees or physical property

36
Q

Why do insurers use proposal forms

A

It is the most convenient, speedy and cost effective way

37
Q

What are the 6 general questions on a proposal for.

A 
A) name 
B) address
C) occupation
D) age
E) details of past insurance 
F)details of other insurances
38
Q

What specific 4 things are needed to quote on a proposal form

A

Detail of previous claims

Period of insurance

Subject matter of the insurance

Sum insured ( the rate the premium is based on- a rate per cent £100 or per Mille £1,000)

39
Q

What are specific questions that are risk specific for Motor

A

Age of driver

Criminal prosecutions

40
Q

What are specific questions that are risk specific for Liability

A

Noise risks
Pollution hazards
Work away from the premises
Contracts entered into

41
Q

What are specific questions that are risk specific for fire

A

Manufacturing process
Storage arrangements
Building construction

42
Q

What are specific questions that are risk specific for Theft

A

Breakdown of types of stock

Security precautions

43
Q

Proposal forms are used by underwriters as a means of obtaining material facts because:
A) it is regulatory requirement
B)it’s convenient and cost effective
C)it prevents misrepresentation by the proposer
D) it provides an opportunity for collecting product W design information

A

it’s convenient and cost effective

44
Q

To obtain material information what do surveys do

A

For larger risks for example a large manufacturing plant

Risk surveyors acts as eyes and ears of th underwriters

45
Q

To obtain material information what are supplementary questionnaires

A

Popular with dealing with particular aspects of risk:
PL- hairdressers using hair dying etc
Product- involving safety equipment of fire prevention equipment
Money- involving very high value transits
Fire- for old or obsolete buildings

46
Q

What is a Market reform contract

A

Carries full details of the risk in a recognised format and is often used in London market
Originally part of the slip used at Lloyd’s

47
Q

What are the three elements of the market reform contract

A

Meetings with client - usual in commercial

Writing to the proposer- personal

Internet search

48
Q

What is the definition of the term material circumstances

A

What would effect the judgement of a prudent underwriter

49
Q

What is the purpose of a proposal form

A

To gather all material facts for deciding on acceptance and terms for the risk

IF2 (15 decks)

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