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Insurance Law Flashcards

This deck covers topic pertaining to Insurance Law at LLB Undergraduate level (Scots and Common Law).

1
Q

What are the key elements to Insurance contracts?

A
  1. Risk
  2. Benefit
  3. Premium
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2
Q

What is the key legislation for Insurance Law?

A
  1. Insurance Act 2015: commercial contracts
  2. Life Assurance Act 1774
  3. Marine Insurance Act 1906
  4. Consumer Insurance (Disclosure and Representation) Act 2012.
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3
Q

What is Indemnity Insurance?

A

When an individua is indemnified for a specific loss i.e. car damage.

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4
Q

What is contingency insurance?

A

When there is an agreed sum that is contingent on an event i.e. life insurance

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5
Q

What are the rules for married women under life insurance policies?

A

Married Women’s Policies for Assurance (Scotland) Act 1880:

s.1: A wife can take out a policy for their husband for their benefit.

s.2: A life assurance policy taken out by a husband for the benefit of their spouse and children is held in trust for their benefit.

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6
Q

Does the rules regarding married women in life insurance policies apply to civil partners?

A

Yes, by virtue of the Civil Partnerships Act 2004 s.243.

A civil partner can take out a life assurance policy for their partner for their benefit.

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7
Q

What is 1st vs 3rd party indemnity insurance?

A

1st party: Loss suffered by the insured.

3rd party: Loss suffered by 3rd party that the insured is liable for.

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8
Q

What sections of the Marine Insurance Act 1906 apply to insurable interest within indemnity insurance?

A

Sections 4-15.

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9
Q

What act applies where the insurance contract is for a business?

A

Insurance Act 2015 primarily.

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10
Q

What are the 4 types of insurable interest according to Feasey v Sun Life Assurance Co [2003] EWCA Civ 885

A
  1. Where the subject matter is property.
  2. Where life insurance with a pecuniary interest in the life of the individual.
  3. Where the subject matter goes beyond property to a project or adventure which the property is important to.
  4. Where the interest is not strictly pecuniary (natural affection).
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11
Q

What is the key difference between insurable interest in indemnity vs contingency insurance?

A

For indemnity, the interest must exist at the point of loss whereas for contingency, it must exist at the point of contracting.

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12
Q

What is the effect of an insurance agreement in Scotland in which there was no insurable interest?

A

The agreement is null and void.

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13
Q

What does Fehilly v General Accident Fire and Life Assurance Corporation Ltd 1982 SC 183 tell us about insurance regarding certain property?

A

Where insurance is for maintenance of specific items and the whole building is damaged, there is only interest in the particular items, not the building itself.

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14
Q

Who owes the duty of disclosure?

A

Both the insured and insurer.

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15
Q

What act governs the duty of disclosure for non-consumer insurance?

A

The insurance act 2015 (s.2).

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16
Q

What does the Insurance Act 2015 act provide generally?

A

That there is a duty of fair representation of risk.

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17
Q

When is the duty of disclosure needed?

A

Before the contract is concluded.

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18
Q

What should an insured disclose under a non-consumer contract?

A

Insurance Act 2015:

s.3(4) every material circumstance which the insured knows or ought to know or disclosure that puts the insurer in the position to make further enquires.

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19
Q

Under the Insurance Act 2015, what circumstances leads to no disclosure being required? (5)

A
  1. If it diminishes the risk
  2. The insurers knows it
  3. The insurer ought to know it
  4. The insurer is presumed to know it.
  5. It is something that the insurer waives information on.
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20
Q

What makes a representation material under the Insurance Act 2015?

A

S.7(3): If it would influence the judgment of a prudent insurer in determining to take the risk and if so, on what terms.

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21
Q

What did Economides v Commercial Union Assurance Plc [1998] QB 587 establish about the knowledge of the insured?

A

That a contract could not be avoided where the insurer genuinely believed the information provided.

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22
Q

What is the test for remedies under the 2015 act for a breach of the duty of fair presentation,

A

S.8: there is a remedy only if they show ‘but for’ the breach the insurer would not have entered the contract at all OR they would have done so on different terms

BUT FOR TEST!

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23
Q

Where are the remedies for breach of duty of fair presentation under the 2015 act?

A

Schedule 1.

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24
Q

What is a qualifying breach of the duty of fair presentation under the 2015 act?

A

S.8(4): where the act is deliberate or reckless or neither deliberate nor reckless.

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25
When is a breach of the duty of fair presentation deliberate or reckless under the 2015 act?
s.8(5): if the insured knew that they were in breach or they did not care if they were deliberate or reckless.
26
Who holds the onus to prove deliberateness or recklessness under the 2015 act?
S.8(6): It is for the insurer to prove the insured acted so.
27
What are the remedies under the 2015 act?
Schedule 1: 1. [para 2]: If breach is deliberate or reckless, the insurer can avoid the contract, refuse all claims and need not return premiums. 2. [para 4]: If the insurer would not have entered the contract on any terms they may avoid the contract, refuse all claims but must return premiums. 3. [para 5]: If the insurer would have imposed different terms the contract will be treated as including those terms. 4. [para 6]: If insurer would have raised the premium, the insurer can proportionality reduce the claim.
28
Can the remedies under the 2015 act regarding the duty of fair presentation be contracted out of?
S.16(2) yes, they can.
29
What happens when a representation under the fair duty of presentation is neither deliberate or reckless under the 2015 act?
The remedy hinges on the facts: what would the insurer have done if they knew the truth?
30
Where is the duty to avoid a misrepresentation in consumer contracts?
S.2 of the Consumer Insurance (Disclosure and Representation) Act 2012.
31
What is the preliminary steps to investigate a breach of the duty to avoid a misrepresentation under the 2012 act?
1. Define a consumer contract [s.1] 2. Introduce the duty [s.2] 3. Show standard of disclosure [s.3] 4. See what the insurer knew or ought to [s.3].
32
Simply put, under the 2012 act, what are the ways there can be a breach of the duty to avoid a misrepresentation?
s.2(3) failure to amend particulars s.3(1) all reasonable circumstances test
33
What are the factors under the reasonable circumstances test for duty to avoid misrepresentations under the 2012 act?
s.3(2): a) Type of consumer insurance and their market. b) Any explanatory material published by insurer. c) how clear questions were d) how well insurer communicated importance of questions [for renewal] e) whether an agent was acting for the consumer.
34
What is the standard of the reasonable circumstances test under the 2012 act?
s.3(3) that of a reasonable consumer.
35
What happens if a consumer dishonestly makes a misrepresentation under the 2012 act?
s.3(5) a dishonest misrepresentation will always show a lack of reasonable care.
36
What is the standard of disclosure for consumers under the 2015 act?
s.3(1) if a consumer has taken reasonable care in light of relevant circumstances unless [s.3(4)-(5)] the insurer was or ought to be aware of particular characteristics or circumstances of the consumer or the representation or they knew the representation was dishonest.
37
What happens if the subject of a life insurance policy is not in the contract under the 2012 act?
s.8: information provided by the subject is treated as if provided by party to the contract. UNLESS: There are questions raised to state of mind, knowledge, circumstances etc of the individual providing information. Then reference is made to the subject and not the contracting party.
38
When does an insurer have a remedy against the consumer for misrepresentations under the 2012 act?
s.4: if the representation was made in breach under s.2(2) The insurer shows, without misrepresentation, the insurer would not have entered the contract or would have done so on different terms.
39
What is the name for a misrepresentation for which the insurer has a remedy under the 2012 act?
s.4(2): a 'qualifying misrepresentation'.
40
Where are the insurers remedies against a consumer for misrepresentations?
Consumer Insurance (Disclosure and Representation) Act 2012 schedule 1.
41
What are the remedies available to insurers for misrepresentations under the 2012 act?
1. [para 2]: Where deliberate or reckless, avoidance of contract, refuse all claims and can keep premiums [unless unfair to consumer]. 2. [para 5]: If the insurer would not have entered the contract at all they can avoid contract, refuse all claims but must return premiums. 3. [para 6]: If would have contracted on different terms, the contract is treated as operating on those terms. 4. [para 7]: If they would have contracted with a higher premium, they can reduce proportionately the amount to be paid on a claim/
42
What does 'reduce proportionately' mean in terms of insurer remedies for misrepresentation?
Schedule 1, Para 8 of CIDRA 2012: (Premium actually charged ÷ Higher premium) x 100.
43
What is the standard for remedies in schedule 1 paras 5-8 of CIDRA 2012?
Schedule 1, para 4: Based on what the insurer would have done if the duty to avoid a misrepresentation was complied with.
44
What is a warranty?
Marine Insurance Act 1906 s.33(1): Assuring that something may or not be done
45
What are the different categories of warranties?
1. Warranties of fact 2. Warranties of opinion
46
What does a warranty of fact include?
Either a statement of fact to the past or present. OR a continuing undertaking, a state of affairs that will be complied with throughout the insurance policy.
47
What did Hussain v Brown [1996] 1 discuss in terms of continuing warranties?
They must be in clear terms in order to be held by courts.
48
What act act and provisions apply to the breach of warranty?
The Insurance Act 2015, sections 10-15.
49
How can an insured escape liability for a claim that they breached their warranty?
Where the insured remedies the breach before the loss, the insurer cannot back out of the contract s.10(2).
50
What does s.11 provide for breach of warranties?
There will be no liability for breach of warranty where non-compliance couldn't have increased the risk of loss that actually happened.
51
Can the breach of warranty provisions be contracted out of?
Insurance Act 2015: s.16(2) yes, they can for commercial insurance BUT: s.15: Not for consumer insurance.
52
What is the relationship between s.10 and s.11 regarding breach of warranty?
s.10: There is no liability where a breach can be remedied before the loss. s.11: Where there was no remedy before the loss, there is still no liability if non-compliance could not have increased the risk. s.11(4) s.10 and s.11 can both apply.
53
What are the 3 categories of fraudulent claims?
1. Wholly fraudulent claim. 2. Exaggerated claim. 3. Collateral Lies.
54
What did Orakpo v Barclays Insurance Services [1994] CLC 343 discuss in terms of fraudulent claims?
That where there is a legitimate claim, if it is tainted by fraud, there is no remedy even for the non-fraudulent part. FRAUD = NO CLAIM AT ALL. [note] This only applies to a wholly fraudulent claim or exaggerated claim.
55
What is the rough definition of a fraudulent device given in Agapitos v Agnew [2003] QB 556?
‘the insured believes that he has suffered the loss claimed, but seeks to improve or embellish the facts surrounding the claim, by some lie’ later on.
56
What does The DC Merwestone [2016] UKSC 45, [2017] AC 1 establish in terms of collateral lies?
Where the lie told is to gain their legal entitlement, and is irrelevant to the amount due, the lie is dishonest but their claim is not. **A genuine claim bolstered by collateral lies does not render the claim fraudulent as it would be disproportionately harsh.
57
Where are the consequences for fraudulent claims found?
The Insurance Act 2015 s.12.
58
What are the consequences for fraud?
The Insurance Act 2015 s.12: 1. Insurer doesn't have to pay the claim. 2. Insurer can recover paid sums. 3. The insurer can [by notice] treat the contract as terminated from the moment fo fraud.
59
Can parties contract out of fraudulent consequences?
Only non-consumer contracts, s.16(2) so long as s.17 is complied with.
60
What happens if a fraudulent claim is made but there is liability that happened prior?
S.12(3) the insurer is still liable as rights and obligations before the fraud are not effected.
61
What is the principal of indemnity according to Castellain v. Preston (1883) 11 QBD 380?
The insured ought to be fully indemnified but not more than their entitlement.
62
What does the principle of indemnity apply to?
Indemnity insurance.
63
When may contractual provisions override the indemnity principal?
1. Where the value is stated in the policy. 2. Where there is a 'new for old' clause. 3. Where there is underinsurance.
64
What is the principal of subrogation and where does it arise?
It arises out of the principal of indemnity and allows the insurer to step into the place of the insured upon indemnity to the insured.
65
What is the consequences of subrogation?
The insurer can: 1. Step into shoes of insured. 2. Sue the wrongdoer in the insured's name. 3. Any defects in legal claim transmitted to insurance company.
66
Is subrogation similar to assignation?
No, assignation includes transferring a right to another, subrogation allows the company to raise a claim in the insured's name, not in their own.
67
What is the extent of subrogation?
If there is underinsurance then the insured can recover the shortfall from the negligent party.
68
What is the principle of proximate cause and where is it found?
Marine Insurance Act 1906 s.55(1): Proximate cause is the proximate cause in efficiency to bring about the loss.
69
What did * Leyland Shipping Co Ltd. v. Norwich Union Fire Insurance Society Ltd [1918] AC 350 roughly say about proximate cause?
"What does “proximate” here mean? To treat proximate cause as if it was the cause which is proximate in time is, as I have said, out of the question. The cause which is truly proximate is that which is proximate in efficiency.’"

Commercial Law (4 decks)

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