Kinh tế học - Chapter 11: Insurance law

This is the prescribed textbook for your course.Available NOW at your campus bookstore!Copyright © 2000 McGraw-Hill AustraliaInsurance LawChapter 111Copyright © 2000 McGraw-Hill AustraliaInsurance contractPremium (consideration) Insurer Insured/Assured (Proponent) Promise of payment by the insurerThe proposal is the offer.The policy is evidence of the contract.2Copyright © 2000 McGraw-Hill AustraliaCancellation of insurance policy (via written notice)A breach of the duty of utmost good faith of disclosureMisrepresentation before the contract was entered intoFailure to comply with a provision of the contractA fraudulent claim made under the contract, or under some other contract of insurance in operation at the timeCover note may be cancelled at any time with three days notice (S60(4))3Copyright © 2000 McGraw-Hill AustraliaCover notesContract requiring payment whether proposal accepted or rejectedContract for interim insurance for up to one month.4Copyright © 2000 McGraw-Hill AustraliaAustralian Prudential Regulation Authority (APRA)Prudential regulator of banks, insurance companies and superannuation funds Issues guidelinesPrevents certain promotional material 5Copyright © 2000 McGraw-Hill AustraliaFundamental principles of insurance lawInsurable interest: The insurer will benefit from the property being preserved, and will suffer detriment if the property is damaged or destroyed.Code of Practice: “The general Insurance Code of Practice (the Code) is a self-regulatory code to promote good relations between insurers, agents and consumers, and good insurance practice by describing standard of good practice and service”.Resolution of disputes: General insurance – Insurance Enquiries and Complaints Ltd (IEC)Life insurance – Life Insurance Complaints ServiceInsurance brokers – Insurance Brokers’ Dispute Facility6Copyright © 2000 McGraw-Hill AustraliaFundamental principles of insurance lawIndemnity principle: Insurer agrees to indemnify the insured for loss on the happening of a particular event. (Fixed payouts are not included.)7Copyright © 2000 McGraw-Hill AustraliaConsentFRAUDULENTINNOCENT (i.e. no intention to deceive)NEGLIGENT False statement of fact False statement of fact False statement of factKnows false or indifferent Believes true Duty of care owedUsed to induce party into contract Used to induce party into contract Duty breachedContract entered Contract entered Loss sufferedDamage suffered Damaged sufferedVOIDABLE contract rescinded – at option of injured party - with damages VALID contractRescind without damages8Copyright © 2000 McGraw-Hill AustraliaFundamental principles of insurance lawDuty of utmost good faith: Both parties must act in good faith and disclose all relevant information.9Copyright © 2000 McGraw-Hill AustraliaFundamental principles of insurance lawDuty of disclosure: Non-disclosure of a material fact may result in a voidance of the contract. NON-DISCLOSURE INNOCENT FRAUDULENT Limitation of  Contract void liability 10Copyright © 2000 McGraw-Hill AustraliaDisclosureMatters that must be disclosed by an insured:Matters that the insured knows to be relevant to the insurer’s decision to insure.Matters that a reasonable person could be expected to have known to be relevant to the insurer’s decision to accept the risk.Matters that the the insured is not required to disclose:Matters that diminish the risk.Matters that are of common knowledge.Matters that the insurer knows or, in the ordinary course of the business, ought to know.Matters where the insurer has waived the insured’s duty of disclosure.11Copyright © 2000 McGraw-Hill AustraliaFundamental principles of insurance lawDoctrine of subrogationApplies to contracts of insurance that are indemnity contracts (e.g. fire and motor vehicle).Entitles the insurer to “stand in the shoes of the insured”.On payment of a loss, the insured person passes his rights and duties, in respect of the insured’s property against third parties, over to the insurer.12Copyright © 2000 McGraw-Hill AustraliaFundamental principles of insurance lawDouble insuranceIndemnity losses can only be claimed up to the actual loss, preventing the insured from profiting from their loss. (Insurers contribute on a pro rata basis.) 13Copyright © 2000 McGraw-Hill AustraliaFundamental principles of insurance lawDoctrine of proximate causeThe insured is covered against loss only if insured against the “proximate cause of a loss”, i.e. the first incident causing the loss.14Copyright © 2000 McGraw-Hill AustraliaDoctrine of privity of contractOnly the parties to a contract can receive rights and obligations pursuant to the contract, i.e. only the parties to a contract can sue or be sued with respect to the contract. Exception: General insuranceSpecified or referred to in the contract15Copyright © 2000 McGraw-Hill AustraliaClasses of insuranceProperty insurance forFire LifeAccident, sickness or disability insuranceLiabilityComprehensive motor vehicleThird party property motor vehicleMarine16Copyright © 2000 McGraw-Hill AustraliaStandard cover Insurer pays a minimum amount, as specified in the regulations.17Copyright © 2000 McGraw-Hill AustraliaRenewal insurance coverInsurer must notify the insured in writing within fourteen (14) days before the cover expires.18Copyright © 2000 McGraw-Hill AustraliaAverage clause Advised in writingAmount paid = Value of property stated in the policy x amount of loss Actual value of the policyInsurance Contract Act = Value of property stated in the policy x amount of loss 80% of the actual value of the property19Copyright © 2000 McGraw-Hill AustraliaTypes of insuranceLife insuranceWhole of life policyTerm policyEndowment policyPure endowment policyAnnuity policyLiability insurance Professional indemnity insurancePublic liability insuranceProduct liability insuranceCompulsory third party motor vehicle schemes20Copyright © 2000 McGraw-Hill AustraliaInsurance provider’s liabilityInsurance agent Acts on behalf of a particular insurer.Liability: Insurer will be liable even if acts outside scope of actual or apparent authority.Insurance broker Runs independent business to arrange the best rate from an insurer, on behalf of the broker’s client.Liability: Owes a duty to the insured to exercise reasonable skill and care – completing proposal forms21Copyright © 2000 McGraw-Hill Australia