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Flashcards in CH 5- GOOD FAITH Deck (77)
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What is utmost good faith

This is a positive duty to voluntarily disclose, accurate and fully all facts material to the risk being proposed,whether requested or not


who does the principle of utmost good faith apply to

It applies to both insurer and proposer


How does the principal of utmost good faith apply differently to the proposer than the insurer

The proposer has the duty to disclose all material facts about the risk to the insrer


How does the principal of utmost good faith apply differently to the insurer than the proposer

The insurer can't introduce new non- standard terms into the contract that were not discussed during negotiations, the insurer can't withhold the fact that discounts are available for certain measures that improve risk


Material Facts is defined by which act

The Marine Insurance Act 1906


What are material facts

Every circumstance is material which would influence the judgment of a prudent insurer in fixing premium or agreeing whether to take the risk


Which case explained the duty of disclosure in insurance contracts

carter v Boehm (1766)


Misleading an insured about a policy cover is a breach of utmost good faith, shown in which case

kettlewell vs Refuge Assurance Company


According to the FCA rules,which element of information should insurers disclose to the clients/perspective client

They should disclose a statement of their demand and needs. Submission of this statement shows that there is a comprehensive fact gathering exercise that must be undertaken


What is CIDRA

The Consumer Insurance(Disclosure and representation) Act 2012 came into force 6/04/2013


What does the Consumer Insurance(Disclosure and representation) Act 2012 stae

It states that all consumers have a duty to take reasonable care not to make misrepresentation


Which common law duty did the Consumer Insurance(Disclosure and misrepresentation) Act 2012 remove

It removed the duty on consumers to disclose any facts that a prudent underwriter would consider material


Consumer Insurance (Disclosure and Representation)Act applies to consumers, what is its definition of consumers

This is someone who takes out insurance wholly or mainly for purposes unrelated to individual's trade, b'ness or profession


Which clause did the CIDRA 2012 ban

It ban the basis of contract clauses


What type of change to insurers and intermediaries did the CIDRA bring about

1.Insurers and intermediaries have had to change their documentation,websites and ways of working
2.Insurers have to make sure they ask specific questions to their policyholders
3.Intermediaries have had to amend their terms of business agreement


The Insurance Act 2015

This Act came into force 16/08/2016, it extends much of the legislation set out in CIDRA to non-consumers insurance contracts


What is the effect of the Insurance Act on Good Faith

The concept of good faith continues but the absolute remedy of avoidance in case of breach no longer exists


How did the Insurance Act 2015 changed the obligations on the parties during placement

They introduced a new duty of fair presentation applying to non- consumer cotnracts


What did the Insurance Act 2015 state about Fair Presentation

The insured must make to the insurer a fair presentation of the risk


When does the new duty of fair presentation apply

It applies before the contract of insurance is entered, and continues through the life of the contract


According to the Insurance Act 2015, the insured is only required to know

1.what is known to them as a individual
2.what is known to one or more of the individuals who are responsible for their insurance


What does a non- individual insured know

They only know what is known to one or more of the individuals who are
1.part of the senior management
2.responsible for the insured's insurance


What Knowledge does the Insurance Act 2015 specifically include

Knowledge of those things that an insured suspects and about which they would have had actual knowledge but for deliberately refraining from confirming/inquiring about the information


According to the Insurance Act 2015 and Insurer ought to know something only if employee/agent of the insurer knows it and ought to have passed it to the individual making decision of whether to take the risk or not
2.the relevant information is held by the insurer, and is readily available to the underwriter


According to the Insurance Act 2015 what is the insurer presumed to know

1.Things that are common knowledge
2.Things that they are expected to know as an insurer offering insurance in the class in question


Which Principle is maintained in Consumer Insurance by CIDRA and non-consumer insurance contract in IA 2015

The principle that every person(insurer or Insured) is responsible for the act and so careless or reckless misrepresentation by agent is treated as if it had been made by the principal


Under CIDRA an intermediary is stated to be an insurer's agent when if

1.the intermediary is an AR of the insurer
2.collects information from the consumer with an express authority from the insurer
3.has the authority to bind insurer to cover and does so


In general,What are warranties

This is a guarantee or promise that gives assurance by one party to the other that specific acts or conditions are true


An example a Warranty

An example is Basis of Contract, have been outlawed by IA 2015


Under the IA 2015 Contracting out is possible

Yes it is possible, provided the insurer can show that the terms included i the contracts were explained to the insured