Chapter 5 Flashcards
Diane approaches the High Street Insurance Brokers for a quotation for her home insurance. They recommend that Diane insures her home with the Home Insurance Company at a premium of £250. Under the FCA’s rules, which of the following are they required to provide to Diane?
A statement of demands and needs and an explanation of how these are met by the product offered.
ABC insurers sends their surveyor out to conduct a fire survey of a warehousing risk. The surveyor fails to notice that amongst the items stored in the premises are some flammable paints. Which of the following statements is true about the insurer’s rights, if this information subsequently comes to light when a claim is made?
The insurer cannot claim non-disclosure in order to void the policy.
Which of the following convictions would be spent under the Legal Aid, Sentencing and Punishment of Offenders Act 2012 [LASPO]?
A 2 year custodial sentence imposed 8 years ago.
Bert is seeking a package insurance policy for his convenience store. Henry has just bought a car and requires motor insurance. Both approach the Composite Insurance Company for a quotation. FCA guidance states that the Composite Insurance Company should explain the duty to disclose all circumstances material to a policy to:
Bert only.
Whilst the looms in the weaving shed at Donald’s textile factory are extremely noisy, his employees all wear ear protectors. In relation to employers’ liability insurance, this is an example of:
one good and one poor physical hazard.
Charlotte partially answers a question on her proposal form for home insurance. Her insurer fails to question this and offers her cover, which she accepts by paying her annual premium. Is Charlotte’s insurer subsequently permitted to avoid her policy on the grounds of non-disclosure of material information relating to the partially answered question?
No, because Charlotte’s insurer will be deemed to have waived the right to do so by not requesting the missing information.
what is an example of physical hazard in relation to motor insurance?
Age of the driver.
One of the reasons why insurance contracts have, until recently, been subject to the duty of utmost good faith is because they are:
intangible products.
Boyle’s Insurers has omitted to tell a proposer about the fact that discounts are available for fitting fire sprinklers in commercial premises. Which principle of insurance has Boyle’s breached?
Good faith.
What is an example of moral hazard?
Previous refusals to insure by other insurers.
How does the continuing duty of disclosure on the insured under a motor policy usually arise?
It is an onerous policy condition.
Under the Consumer Insurance [Disclosure and Representations] Act 2012 [CIDRA], a consumer has a duty to:
take reasonable care to answer insurers’ questions fully and accurately.
Under common law and recent law reforms, the duty of disclosure starts when:
negotiations begin.
To comply with the duty of disclosure, a proposer must ensure that any information supplied is:
true to the best of their knowledge or belief.
Although there has been a deliberate breach of the duty of disclosure, a motor insurer pays a third party personal injury claim as required by the Road Traffic Act 1988. From whom, if anyone, does the insurer have a right of recovery of their outlay?
The insured.
