Chapter 3: Insurance Policies Flashcards
(42 cards)
What is the parol evidence rule?
Only the contract itself can be relied upon, not the negotiations leading up to it
What form is a policy generally issued in?
A schedule form consisting of a pre-printed policy wording and a policy schedule.
The policy schedule indicates which parts of the pre-printed wording are in force, as well as containing all the variable information and details of the specific risk
What sort of language should policy documentation use?
Clear, everyday wording with definitions for unfamiliar words
What does contra proferentem mean?
When there is a dispute over unclear or ambiguous policy wording it is interpreted against the party that provided the wording (normally for insurance this would be the insurer)
Can the terms of an insurance contract be challenged for being unfair?
By default no, however if a term is ambiguous or not prominent enough that can be challenged under the Consumer Rights Act 2015
What happens if an ambiguous or not prominent term is challenged and deemed to be unfair?
It is not binding
Generally, what are the 8 sections of a basic general insurance policy?
- Heading
- Recital Clause (preamble)
- Signature
- Operative Clause (insuring)
- Exceptions
- Conditions
- Schedule
- Information/Facilities
What will the heading section of a policy contain?
Insurer name, address + logo
What is the purpose of the recital clause/preamble?
“Sets the scene” - refers to the two parties coming together to form the contract and outlines the purpose of the contract (the insurer promising to indemnify the insured in return for a premium)
Also makes the proposal form part of the basis of the contract
What is arguably the most important section of a policy?
The operative clause
Also called insuring clause
What does the operative/insuring clause do?
Outlines the cover provided - may be only one or a number of clauses for different aspects/limits
What is a condition?
A term that the insured agrees to comply with during the cover period
What two types of conditions are there?
Express and implied
What is an express conditon?
A condition with is stated in the policy
What is an implied condition?
A condition implied by common law that is not expressly stated in the policy
What would be contained within the policy schedule?
The variable parts of the policy, it makes the policy specific to the insured
Insured name + address Policy period Premium Policy number Subject matter Sum insured + limit of liability Special exclusions/conditions What sections of the policy wording are applicable
What may the information and facilities section of a policy contain?
Definitions - words capitalised or in bold
Customer service policies (response times)
Complaints procedures
How to claim
What are the two types of exclusions found in most general insurance policies?
- General exclusions - apply to all sections of the policy
2. Specific exclusions - apply to specific parts of a policy
What is a market exclusion?
A general exclusion that is common to all (or virtually all) insurance policies
What are some common market exclusions?
- War
- Nuclear
- Terrorism (for commercial insurance, esp property)
- Pollution/contamination (for property insurance)
- Cyber risk (except for specialist insurance)
- Sonic boom
- Contractual liability (liability which only exists due to a contract the insured has entered into)
- Marine (property covered by a marine policy is excluded from a property policy)
Although terrorism is a common market exclusion, terrorism cover can be purchased. How does this work?
Insurer’s can offer terrorism cover but it must be purchased on an “all-risks” basis, cover all the policy and all property locations. The insurer then reinsures it through a mutual re-insurer, Pool Re, which was setup in collaboration with the UK government and backed by a treasure guarantee. The insurer’s liability is capped per event and year and in Northern Ireland is provided directly by the government
What are the main express conditions?
- Duties of the insured
- Alteration - extends duty of disclosure
- Actions in event of a claim
- Fraud
- Reasonable precautions
- Contribution
- Subrogation
- Average
- Arbitration
- Cancellation
What is a reasonable precaution condition?
States that the insured must act as if they are uninsured - having insurance is not a reason to act carelessly. Instead they must act to minimise all losses
What is a contribution condition?
Limits an insurer’s liability to their share of the loss in a situation where cover is provided under two or more policies
