LM2 - Chapter 5 Flashcards
(47 cards)
Private individuals
Third party motor insurance and public liability insurance in respect
of the ownership of dangerous wild animals and/or dangerous dogs are compulsory for
private individuals.
Professions and businesses
Motor insurance and employers’ liability insurance are
both compulsory for every business which uses motor vehicles on a road and has
employees respectively.
Why are some insurances compulsory
- to provide funds for national compensation
- in response to national concerns
Motor third paarty
the most basic level of motor insurance is a legal requirement under the Road Traffic Act 1988
The Act provides that it is illegal to cause or permit the use of a vehicle on a public road
(extended now to include ‘any other public place’) unless an insurance policy is in force,
covering third party property damage and third party bodily injury or death.
Employers’ Liability
Under the Employers’ Liability (Compulsory Insurance) Act 1969
as updated by regulations issued in 1998, 2004, 2008 and 2011, employers are required to
hold employers’ liability insurance.
This insures them against their liability to pay compensation to employees who sustain bodily
injury or disease, arising out of and in the course of their employment.
There is a list of exemptions from this requirement, mainly relating to employees who are
also family members, employees not ordinarily resident in Great Britain and Government
agencies. In practical terms, however, most employers have to insure this risk.
The minimum required limit of indemnity has been increased over the years and now
stands at £5m, though the insurance market provides £10m as standard. There is also a
requirement for employers to display their insurance certificates (provided by insurers) at
each place of work.
Employers Liability Tracing Office
the organisations records of historic EL coverage must be maintained. the ELTO can identify insurers that provide cover to employees
Public liability
Certain operations such as riding schools are required to hold public liability
insurance under the provisions of the Riding Establishments Act 1970.
This type of insurance indemnifies the insured against claims arising from the use the
insured’s horses. This includes injuries sustained both by persons riding the horses and
members of the public. The insurance must also indemnify the horse riders themselves
against any liability they may incur for injury to members of the public, arising out of the hire
or use of the riding school proprietor’s horses.
Liability for dangerous wild animals and dangerous dogs
Apart from motor insurance,
the other forms of liability insurance which are compulsory for private individuals are in
respect of the ownership of dangerous wild animals or dangerous dogs.
This is not generally a free-standing insurance but likely to take the form of an extension
to another insurance such as home insurance, where it usually falls under the public
liability section
Professional negligence/professional indemnity
Certain professionals such as solicitors,
accountants, doctors and dentists are required to hold professional indemnity insurance as a
condition of having a licence to practice
When does employers liability insurance date back to
Employers’ Liability Act 1880
What type of insurance is liability
liability insurance is known as ‘long-tail’ business which means that
the losses can take time to be notified and the claims can take some time to develop and
be resolved. Defending a claim made against you as a driver, or as an accountant or doctor,
even if the claims are spurious, costs money; the costs of defending yourself in court can
bankrupt you even before any final judgment is made against you.
Most of the insurances also provide that the insurers will defend claims made against the
insureds. This removes the financial burden of the legal fees at least in part (as most policies
have a deductible or excess which often applies to fees)
Warranty
A warranty is a promise made by the insured to the insurer. A breach of warranty suspends the insurance contract for the period of the breach
what normal insurance policies do not apply to liability
warranty and good faith/fair presentation
Employers’ Liability (Compulsory Insurance) Regulations 1998
There is prohibited in any contract of insurance any condition which provides that no
liability…shall arise under the policy or that any such liability so arising shall cease, if:
* some specified thing is done or omitted to be done (i.e. a warranty);
* the insured does not take care to protect employees against the risk of injury or
disease in the workplace (another area where a warranty might be applied);
* the insured fails to comply with any legal requirements for the protection of employees
against risk of injury or disease in the course of their employment; or
* the insured does not keep records or fails to provide information to the insurers
Compulsory insurance - USA
workers’ compensation (also called employers’ liability insurance) provides
coverage for employees who are injured or become ill at work. This insurance provides
coverage for medical expenses, death benefits, lost wages and rehabilitation. In exchange
for coverage, employees relinquish the right to sue the employer for damages unless the
employer intentionally harmed the employee or failed to carry the required coverage for the
relevant state. Each state regulates its own workers’ compensation programme rather than it
being a countrywide (or federal) system.
Every state in the USA also has compulsory motor insurance for commercial vehicle owners– but interestingly not for private vehicle owners.
Some US states have a requirement that employers buy short-term disability insurance for
their employees. This insurance covers illnesses and disabilities not directly related to the
employment and pays out a weekly benefit related to earnings for a set period of time.
Compulsory insurance - Turkey
a requirement for property-owners to purchase insurance against earthquake
risks, and some compulsory motor insurance.
Compulsory Insurance - Australia
a similar level of compulsory third party motor insurance to the UK.
Interestingly, in all but two of the states in Australia there is only one provider of this basic
insurance.
Compulsory insurance - Germany
the requirement for third party liability insurance is broader in scope than just
motor insurance. It is compulsory to have third party liability insurance in relation to any
event for which a German court might consider you negligent.
Consumer Rights Act 2015
Under this piece of English law, terms and notices in consumer contracts have to be fair.
This concept is not new, as unfair contracts legislation has been in force for many years.
The Act states that an ‘unfair term’ in a consumer contract will not be binding on that
consumer. However, if the consumer chooses to rely on that term then they may do so.
Unfair term
contrary to the requirement of good faith, it causes a significant imbalance in the
parties’ rights and obligations under the contract to the detriment of the consumer.
How does a term avoid being unfair
a term should be transparent and prominent, expressed
in plain and intelligible language, and, if written, be legible.
A practical example of a potentially unfair term listed in the schedule to the Act is one
which ‘makes the traders’ commitments subject to compliance with a particular formality’. An
example of this might be the claims notification provisions.
Contracts (Rights of Third Parties) Act 1999
a contract is an agreement between two or more parties. Only those persons who are actually a party to the contract can enforce the terms of the contract. The legal term used for this is ‘privity of contract’.
Consequently, even if a contract is made with the purpose of benefiting someone who is not
a party to it, that person (the ‘third party’) has no right to sue for breach of contract.
Privity rule
The Contracts (Rights of Third Parties) Act 1999 reformed the privity rule and set out the
circumstances in which a third party will have a right to enforce a term of the contract.
Broadly speaking, either the contract must make express provision for the enforcement, or
the third party must be expressly identified in the contract by name, class or description. The
remedies allowed are those usually permitted (damages, injunction or specific performance).
Injunction
An injunction is a remedy that the court can award which is an order to prevent a party
from doing something
