Chapter 6: Pre-contractual Information Duty Flashcards
(21 cards)
What type of contract is an insurance contract?
A contract of utmost good faith
What is a consumer contract of insurance?
A contract of insurance between someone who enters the contract for reasons unrelated to their trade, and an individual who carries on the business of insurance
How can you summarise the consumer insurance (disclosure and representations) act 2012?
It abolished pre contractual duty of disclosure for consumers and replaced it with the duty to take reasonable care to not make a misrepresentation.
Define ‘continuing duty of disclosure’
Define ‘moral hazard’
Define ‘non-disclosure’
Define ‘physical hazard’
Define ‘qualifying breach of the duty of fair presentation of the risk’
Define ‘qualifying misrepresentation’
Define ‘misrepresentation’
A false statement of fact that induces the other party to enter into the contract
Define ‘material facts’
A fact that would influence the judgement of a prudent insurer in determining whether they would take on the risk, and if so, on what terms.
Define ‘fraudulent misrepresentation’
When a person makes a false statement with the deliberate intention of misleading another and putting them at a disadvantage
Define ‘innocent misrepresentation
Also negligence- misrepresentation without the intention of misleading another.
Why is the duty of disclosure not as pertinent in the sale of goods compared to insurance?
Because the customer can observe the goods and determine if it is a good deal. This is not the case in insurance.
Define ‘positive duty of disclosure’
A duty of the insured to tell the underwriter what they need to know to insure something. They must volunteer the information
What happened in Rozanes v Bowen (1928)?
Defined the positive duty of disclosure- said the underwriter knows nothing and the insured knows everything.
How does the insurance act 2015 change the duty of disclosure?
Said the duty is complied with if the insured tells the insurer they need to make further enquiries to discover the material circumstances.
What happens if an insured or an insurer is using an agent?
The positive duty of disclosure still applies.
What happened in Container Transport International Inc vs Oceanus Mutual Underwriying Association Ltd (1984)?
The court said material circumstances which “influence the judgement” of an insurer don’t need to change their decision, they just need to be facts that would influence forming their opinion on the risk.
What happened in Pan Atlantic Insurance Co and Pine Top Insurance Co (1994)?
Said it was not enough to show a material fact wasn’t disclosed, it was also necessary to show the underwriter was induced by the non disclosure to enter the contract on the relevant terms.
What happened in Involnert Management Inc v the Galetea 2015?
If there has been misrepresentation of material facts, the question is not “what would the insurer have done if told the truth?” But “what would the insurer have done if there had been no misrepresentation?”
