Making a Claim

Question 1

What is the doctrine of privity of contract from chapter 3?

Answer 1

Confides the rights and duties under contract to the persons who originally made it.

Question 2

What are the general exceptions to the doctrine of privity of contrace?

Answer 2

1. TP having the benefit of the contract assigned to them ASSIGNMENT
2. TP gaining the right to claim on an insurance policy under the rules of agency AGENCY
3. Beneficiaries under trust TRUST

Question 3

the Contracts (rights of third parties) act 1999 changed what?

Answer 3

Common law and provides that a TP can enforce a contractual term if the contract provides that they may do so or the contract purports to confer a benefit on a TP.

Question 4

Under the Contracts (rights of third parties) act 1999, when are third parties not able to claim?

Answer 4

If “on a true construction of the contract it appears that the parties did not intend the term to be enforceable by the TP.
ie. Insurers can override the operation of the act by excluding it.

Question 5

What does construction mean?

Answer 5

Meaning or scope of the words used in the policy.

Question 6

What statue relating to motor insurance is an exception to the doctrine of privacy of contract?

Answer 6

Road Traffic Act 1988 which makes it possible for persons other that the policy holder to enforce a policy, despite the fact that they were not party to the original contract.

Act also stipulates that the victim of a road accident is able to make a cliam directly against the motor insurer of a negligent driver.

Question 7

The Third Party (rights against insurers )act 2010 is an exception to the doctrine of privacy of contract, what does it state and mean?

Answer 7

Gives a TP claimant the ability to bring a claim directly against liability insurers even if the insured person or company under the policy has become insolvent.

Means that the claimant does not go uncompensated or end up in a long line of creditors scrambling for any remaining assets of the insured.

Question 8

What are the two acts that relate to property that provide an exception to the doctrine of privity to contact?

Answer 8

Law if Property Act 1925 and
Fires Prevention (metropolis) act 1774

Question 9

The Law if Property Act 1925 is an exception to the doctrine of privacy of contract, what does it state and mean?

Answer 9

The benefit of the insured is automatically assigned to a purchaser if, after contracts are exchanged, the property is damaged or destroyed.

Question 10

The Fires Prevention (metropolis) act 1774 is an exception to the doctrine of privacy of contract, what does it state and mean?

Answer 10

An old statute which allows a person with an interest in buildings to compel the owner or their insurers to rebuild the property if its destroyed by a fire.

Question 11

What type of insurance policy often grants an indemnity to persons other than the main insured?

Answer 11

Liability Policies.

Question 12

What does policies with additional insureds mean?

Answer 12

Indemnity may be given to any principle that employers the insured, owners of plant that is hired by insured and employees/directors of the insured firm as some examples.

Question 13

What must the insured do in the event of a claim?

Answer 13

Give notice of claim
Prove that a loss happened

Question 14

What time frame must the insured give notice of a cliam?

Answer 14

The insurer will normally give a time frame for this.
This is to allow the insurer to assist the insured with the loss and register it on there boos ASAP.

Question 15

What happens if the insured doesn’t notify the insurer of a claim in the time stipulated?

Answer 15

They may be in breach of a condition precedent to liability which gives the insurer the right to deny liability for the loss.

If the condition is considered a mere condition the insurer may reduce the claim because of prejudice and they may deduct the payment to the insured to reflect this.

Question 16

What does the insured have to do after notification?

Answer 16

They then have the burden of proof, which means they will have to confirm the loss was caused by operation of an insured peril and confirm the amount of a loss. These must be established by the insured on the balance of probabilities.

Question 17

A loss must be fortuitous, what does that mean?

Answer 17

Accidental, it cant be deliberate by the insured. Can be due to own carelessness though.

Question 18

Are deliberate acts by persons other than the insured covered?

Answer 18

Provided there is no involvement by the insured, yes.

Question 19

After the burden of proof has been provided by the insured, what happens next?

Answer 19

The burden sifts to the insurer and if they wish to reject a claim they must prove the loss stems from an excluded peril or there has been a breach.

Question 20

What does ICOBS state in terms of insurers processing a claim ?

Answer 20

Claims must be handled promptly and fairly, that reasonable guidance be provided to the policy holder, that the insured may not unreasonably reject a claim and they must settle claims promptly.

Question 21

Once a settlement has been agreed, if it is not paid promptly, what happens?

Answer 21

Under an extension to the Insurance Act 2015, insurers will now be liable for the payment of damages in the event that a claim has been paid later than it feasibly should.

Question 22

What governs the IA15 rule that insurers are liable for damages for late settlement payment of claims?

Answer 22

The Enterprise Act 2016 which added a section into the IA15 which allowed the court to award damages for late payments where the insurer has acted unreasonably.

Question 23

What is the doctrine of proximate cause?

Answer 23

When a loss must result from the operation of an insured peril if the insurance is to respond. Often referred to as the “dominate cause of a loss”

Question 24

How do courts look for the dominate cause of a loss?

Answer 24

Look at the chain of causation leading up to the event/loss and any breaks in the chain or new intervening causes.

Remote or indirect causes of losses will not be the proximate cause.

Proximate in efficiency and not closes in time.

Question 25

What does the MIA1966 state in terms of proximate cause?

Answer 25

The proximate cause off a lost must be a peril insured against.

Question 26

On a named perils policy what are the three types of perils and there meanings?

Answer 26

1. Insured Perils - when they are specifically and expressly written into the policy as being insured.
2. Excluded Perils - when it is written into the policy as an exclusion.
3. Uninsured or unnamed perils - policy is silent on them

Question 27

On an “all Risks” policy what types of perils are there?

Answer 27

Any peril that is not excluded on the policy is covered.
There are no uninsured or unnamed perils

Question 28

What does concurrent causes mean?

Answer 28

Where there are two things that operate at the same time to bring about a loss.

Question 29

What is independant perils?

Answer 29

Two + perils that combine to cause a loss.
ie Each would have caused a loss on its own - the insured needs to establish the proximate cause of a loss was an insured peril.

Question 30

What is interdependant perils?

Answer 30

2+ perils combined to cause a loss however neither would have caused a loss on its own.

Question 31

Where an insured peril and excluded peril combined is it covered?

Answer 31

No - claim would be rejected

Question 32

Where an insured peril and an uninsured peril combined is it covered?

Answer 32

Yes

Question 33

What would insurers expect of the insured when it comes to avoiding losses?

Answer 33

To take reasonable precautions to avoid a loss and reasonable steps to mitage any loss which occurs.

Question 34

Do insurers offer cover for the expense of mitigating or preventing a loss?

Answer 34

Generally no unless the policy suggests otherwise.
Exception being Marine Insurance policies which are likely to contain “sue and labor” clauses which entitles them to claim for expenses incurred to prevent/minimize insured losses.

Question 35

Can insured modify the doctrine of proximate cause?

Answer 35

Yes they can include exclusions which state they will not be liable for any losses arising directly or indirectly by a particular peril.

This gives insurers the ability to exclude a loss where the peril operates as a remote cause of the loss.

Question 36

What is a fraudulent claim?

Answer 36

Insured falsify there losses or causes a deliberate loss or they may have had a genuine loss to start with but then lied about the circumstances or exaggerated their loss.

Question 37

What is the ABI’s definition of fraud?

Answer 37

Insurance fraud is when someone invents or exaggerated a claim or does not tell the truth in order to obtain cheaper cover.

Question 38

When would we refer to the Fraud Act 2006?

Answer 38

To see if someone is guilty of fraud.

Question 39

What do offences under the fraud act 2006 include?

Answer 39

Making a false representation
Failing to disclose information which there is a duty to disclose
Dishonestly abusing a position.

Question 40

Under the IA15 what does it clarify in relation to fraud?

Answer 40

Made clear that a policy will be terminated for evidence of fraud from the date of the fraudulent act.

Question 41

How can you claim for damages at common law for fraud?

Answer 41

Under the tort of deceit, if established then an insurer can pursue a claim for its losses against a fraudulent insured or third-party.

Question 42

What is the fraudelent device defense?

Answer 42

When the insured has lied about the circumstances of a loss and the insurers rejection of the claim is refered to as the fraudulent device defense. The term refers to the fraudulent statments that are designed to increase the liklihood of a claim being paid out.

Question 43

What is the main case in the fraudulent device defense?

Answer 43

Versloot dreading case.

Question 44

Under IA15 if the insured makes a fraudulent claim, is the insurer liable to pay the claim?

Answer 44

No
The insured may also recover and money already paid and treat the contract as terminated from the time of the fraudulent act.

If the insurer terminates the contract, it doesn’t need to return any premiums paid and it may refuse to pay any claims arising after the fraudulent act.

Question 45

What is the standard of proof required in both a criminal and civil case?

Answer 45

Criminal - beyond reasonable doubt.
Civil - balance of probabilities

Question 46

What does the Criminal Justice and Courts Ace 2015 relate to ?

Answer 46

Personal Injury Claims

Question 47

Under the Criminal Justice and Courts Act 2015 what happens following a fraudelent personal injury claim?

Answer 47

If the original claim was genuine however one aspect of it is fraudulent, the courts are likely to reject the whole claim.

Question 48

Does the proceeds of crime act 2002 relate to insurance fraud?

Answer 48

Yes - if an individual has been convicted, a confiscation order can be made to recover the assets that have been fraudulently obtained.