Chapter 3: Agency and Insurance Legal Principles

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What are the first essential elements of a valid contract?
The essential elements are offer, acceptance and consideration.
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What is meant by a void contract?
A void contract is a contradiction in terms since it is no contract at all; it has no binding effect on either party.
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List the ways in which an agent/principal relationship may be created?
An agent/principal relationship may be created by;
- Consent
- Necessity
- Ratification
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List three ways insurable interest can be created?
Insurable interest can be created at common law, under contract and under statute.
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What is a material circumstance from an insurer's point of view?
A material circumstance is one which would influence the judgement of a prudent insurer in fixing the premium or determining whether to accept the risk.
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List three safeguards that the consumer insurance (disclosure and representations) act 2012 offers to a proposer that innocently failed to provide an insurer with full details of the risk to be insured?
The safeguards provided by the act are that;
- protection is offered if the proposer was unaware that a duty to disclose exists.
- the insurer is prevented from denying a claim when the proposer has acted honestly and reasonably.
- the insurer cannot ref
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List the four options by which indemnity may be provided under a policy?
The options are;
- Cash payments.
- Repair.
- Replacement.
- Reinstatement.
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Define the proximate cause?
Proximate cause means the active, efficient cause which sets in motion a train of events which brings about a result, without the intervention of any force started and working actively from a new and independent source.
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List the six requirements which must be satisfied before contribution arises?
The following requirements must be satisfied;
- Two or more indemnity policies must exist.
- Two policies must cover a common interest.
- Two policies must cover a common peril.
- Two policies must cover a common subject matter.
- Each policy must be liab
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How might subrogation arise?
Subrogation may arise under tort, contract, statute or subject matter of insurance.
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Identify the formula used to calculate a claim subject to the pro rata condition of average?
The formula would be;

Sum insured ÷ Value of goods at time of loss

Loss=Claim settlement
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Other cards in this set

Card 2

Front

What is meant by a void contract?

Back

A void contract is a contradiction in terms since it is no contract at all; it has no binding effect on either party.

Card 3

Front

List the ways in which an agent/principal relationship may be created?

Back

Preview of the front of card 3

Card 4

Front

List three ways insurable interest can be created?

Back

Preview of the front of card 4

Card 5

Front

What is a material circumstance from an insurer's point of view?

Back

Preview of the front of card 5
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