Chapter 6: Pre-contractual information duty

Question 1

contract of utmost good faith

Answer 1

insurer and insured have duty to deal honestly and openly

Question 2

caveat emptor

Answer 2

buyer beware - the opposite of upmost good faith

concerns the sale of goods

Question 3

effect of the consumer insurance (disclosure and representaitons) act 2012

Answer 3

removed precontractual duty of exposure from consumers and replaced it with the duty to take reasonable care not to make a misrepresentation

Question 4

effect of IA 2015

Answer 4

removes nonconsumer precontractual duty of disclosure, replaced with duty of fair presentation of the risk

imposes two duties
- dont misrepresent any matter relating to the insurance (dont lie)
- disclose all material facts (dont hide anything relevant)

Question 5

misrepresentaion

Answer 5

• false statement of fact that induced the other party to enter into the contract

it must:
- statement of fact
- material
- induced
- cause loss to the party that relied on it
- made by a party to the contract

Question 6

material fact

Answer 6

one a prudent insurer would deem relevant, not a reasonable person

Question 7

fraudulent misrepresentation

Answer 7

the insurer would have to prove fraud
- intentional
- insurer can void contract and keep premiums

Question 8

innocent misrepresentation

Answer 8

unintentional

Question 9

remedies for misrepresentations

Answer 9

consumer
- only pursue remedies for fraudulent based on the wording of the 2012 act

nonconsumer
- regardless of fraudelent, innocent or negligent

Question 10

negligent misrepresentation

Answer 10

the person didnt take sufficient care to check it was correct

Question 11

positive duty of disclosure

Answer 11

one must not only misrepresent but disclose information

under IA 2015
- must disclose what material facts that they know or ought to know - ask staff and agents
- give enough info to put a prudent insurer on notice that they should as more questions

Question 12

insured is assumed to know anything known by?

Answer 12

those responsible for the insured insurance
- risk manger
- relevant employees
- agent

Question 13

agents duty nonconsumer

Answer 13

insurer can pursue remedy for breach by agent, it is attributed to the insured

Question 14

agent definition consumer

Answer 14

• appointed rep
• collects info from the insurers on the insured behalf
• bind the insured to cover, and has the authority to do so

Question 15

material fact under IA 2015

Answer 15

influence the decision of a prudent insurer to take the risk, and under what terms

Question 16

prudent insurer

Answer 16

means reasonable insurer

Question 17

actual inducement test

Answer 17

• materiality doesnt mean inducement but may be persumed in some rare cases

Question 18

when is a remedy for breach of duty of positive disclosure valid?

Answer 18

• insurer wouldnt have entered into the contract
• wouldve entered the contract on different terms

Question 19

nexus question

Answer 19

does the loss and the missing fact need to connected? no

Question 20

how 2012 act assess reasonable care

Answer 20

• type on insurance contract (target market)
• explanatory material
• clarity/specificity of the insurers questions
• how clearly the insurer communicated the importance of the questions
• presence of an agent

Question 21

examples of material facts

Answer 21

• special/unusual facts relating to the risk
• any particular concerns that led to insure
• any common disclosures for that field/insurance

Question 22

effect of the equality act 2010

Answer 22

outlaws discrimination on the grounds of protected characteristics

• ages
• disability
• gender reassignment
• marriage and civil partnerships
• pregnancy and maternity
• race
• religion
• sex
• sexual orientation

they can consider occupation

Question 23

main policies affected by considering gender

Answer 23

motor
annuities
life

Question 24

strongest indication of potential moral hazard

Answer 24

previous criminal offences

Question 25

loaded premium

Answer 25

premium increased above the normal rates, reflecting increased hazard

Question 26

things that need to be disclosed

Answer 26

-idendity of the insured - criminal acts - previous losses - adverse insurance history - details of other policies

Question 27

things that dont need to be disclosed

Answer 27

- matters of law - factors that lessen the risk - factors known by insures - information waived by the insurer - info the insurer ought to know (common knowledge, public info, trade info) - info outside the scope of the specific question - facts that shouldve been revealed by inspecting the risk - facts unknown to the proposer - spent convictions

Question 28

when is there a duty of fair presentation

Answer 28

during negotions, ending when the contract is formed (extra-contractual) no general duty to disclose material facts once the contract is formed disclosure revivied at renewal

Question 29

do long term contracts have renewal

Answer 29

nah, more like continuation

Question 30

where a duty of disclosure exists in during the contract

Answer 30

- changes in the contract, failure would mean there was no meeting of minds - increase in risk clauses, breached when the change is permenant -

Question 31

good faith vs duty of representation IA 2015

Answer 31

no express remedy for breach of good faith - set by the court good faith exists through the entire contracts

Question 32

cross-cutting rules

Answer 32

- act in good faith towards retail customers - avoid causing foreseeable harm - enable and support customer pursuit of financial objectives

Question 33

remedies for fraudulent claims

Answer 33

- forfeit claim - if deliberate = cancle contract, burden of proof on the insured

Answer 34

motor insurance can not be nullified once an accident has occurred

Question 35

who can breach the precontractual informaiton duty

Answer 35

only insured

Question 36

can the insurer keep premiums

Answer 36

not if breach of information duty was innocent

Question 37

can an insurer calim damages with mis presentation

Answer 37

yes if it was fraudulent

Question 38

how long can an insurer be silent before they waive their rights

Answer 38

3 months