Chapter 5: Insurance Contract Formation and Insurable Interest Flashcards
(45 cards)
define ‘offer’
Define ‘statute’
When does an insurance contract come into existence?
When the offer made by one party is unconditionally accepted by the other
What is an invitation to treat?
NOT a true offer, but an invitation to the other party to enter negotiations.
Which, of the slip or the policy, is the binding insurance document?
The policy.
When is contract certainty achieved?
the complete and final agreement of all terms between the insured and insurer at the time that they enter into the contract, with contract documentation provided promptly thereafter
How many forms of insurance contract are there after MRC reforms?
Only one, not a sep slip and policy.
Define ‘acceptance’
Accepting an offer. This cannot happen by doing nothing, an acceptance must be communicated to the other party. This can be through saying something, or by an action (for example driving your car, for motor insurance)
What must be agreed for acceptance?
The subject matter of insurance, the duration of the contract, and the amount of premium.
Define ‘renewal’
The renewal of an existing policy. In contract law terms, this is a fresh contract, so needs new offer and acceptance.
What happened in Danbol Pty Ltd v. Swiss Re International SE (2020) VSCA 274?
The court discussed if an insurer’s offer to extend cover after expiry was a unilateral offer. It found it was not, as there was mutual promise in the offer- to pay the premium and offer cover, and the insured had not expressed their acceptance as they did not pay the premium in time.
Define ‘unilateral offer’
A contract where one creates obligations only on the offeror who promises to do something if the other party performs an act. So there does not need to be acceptance.
Define ‘contractual intention’
The intent to be legally bound into a contract. Insurance contracts are almost always intended to be legally binding.
When does an insurance contract come in to existence?
Depends on what the insurer has offered. It may not be immediately, but can be before the premium is paid.
If a policy does not allow a proportionate return of premium on cancellation, how much premium does the insured pay?
All of it, as per the terms of the contract.
What type of insurance contract should be in writing?
The only type is marine insurance (Marine Insurance Act 1906)- the contract can exist before the policy doc is issued, but a policy doc is required to make a claim
Which types of insurance contract must be evidenced in writing?
Contracts of guarantee. This refers to some fidelity guarantee insurances.
Can minors sign insurance contracts?
Yes, and the insurer has to meet all claims under the policy. BUT minors are only bound by contracts for necessaries and beneficial contracts, so an insurer cannot enforce it against them.
Can patients with mental disabilities and drunken persons sign insurance contracts?
Yes, but they can void the contract of at the time of making it they did not understand what they were doing and the other party knew this.
How are most UK insurance companies created?
Through the Companies Acts
What are the main statutes covering insurance companies now?
Financial Services and Markets Act 2000 and the Financial Services Act 2012.
Do companies need to be licensed to write insurance business in the UK?
No, this was effectively reversed by the Financial Services Act 1986, who said the insured could choose to enforce the contract or get their premium back. The insurer could only enforce the contract at the discretion of the court.
Define ‘insurable interest’
No single definition, but it is the legal right to insure arising out of a financial relationship recognised at law, between the insured and the subject matter of insurance.
Define ‘current interest’
Having interest in the subject matter of the insurance NOW, not hoping you will have it in the future.
