Insurance Contract Formation Flashcards
An example of an invitation to treat by an insurance company?
A published prospectus containing details of cover and rates of premium
Who makes the offer?
No definite rule
How is an offer deemed accepted by the insured if they don’t confirm?
If they act in reliance e.g. drive their car
Must have received the offer though
What must both parties agree on in an insurance contract? (3)
Subject matter
Duration
Premium
What is ‘consnsus ad idem’?
Meeting of minds
Contract is invalid if this doesnt exist on an essential term in the contract
What is ‘signing down’?
Very common in Lloyd’s
If each insurers part on a slip makes the subscription exceed 100%
Each insurer reduces their portion of the risk and their premium
Its an express contractual provision under the MRC
(Normally its not ok for one party to alter a contract but here it is)
When does a contract come into existance?
When the offer is accepted
Cover might operate at a later date
What is Contractual Intention?
Both parties must have intended to be legally bound by the contract
If not the contract is not binding
When is Contractual Intention presumed?
In non consumer insurance contracts
What is Consideration?
In English Law a promise is not legally binding unless it is supported by Consideration
i.e. unless something of value is given in exchange for it
What are the general rules regarding return premiums?
Once risk starts to run no return premium is due if cancelled early
(In reality insurers often give pro rata refund on MTC)
If risk never attached then full return due (this is a total failure of Consideration)
No refund at all of there is fraud or if policy void due to illegality
Why might there be a total failure of Consideration? (Risk failed to run) (4)
Proposal may be withdrawn
Policy may be void for mistake - (No consensus diem)
Void for no Insurable interest
Policy avoided ab initio
What type of Insurance contracts must be in writing?
Marine Insurance Policy Only needs - Name of PH or agent Be signed on or on behalf of insurer Specify the subject matter
What formal rules are associated with a Life insurance policy in regards to written contract?
Life Assurance Act 1774 requires the policy to nams the person interested in it, this suggests the need for a formal policy
What did the Deregulation Act 2015 change in respect to Motor Insurance?
Previously the RTA 1988 stipulated the PH had to have a physical cert delivered to them before driving
This was removed by the Deregulation Act 2015
