Describe about the Business Quotations and Insurance Broker.
An insurance broker can always stop doing business for any one insurance company of so decided and this can be done by mutual agreement termination. But there may be certain legal implications of such termination of agreement between both broker and insurance company. The broker is a representative of different insurance companies and it acts like an agent of the insurance company but he actually acts as an agent of the insured only although he works for so many insurance companies at a time. The broker gets the remuneration from the insurance company in the form of commission although it acts specifically on behalf of the clients only. The broker is supposed to enter into an agreement or contract to work on behalf of the insurance company. The brokers are an actor on behalf of the client but are paid by the insurance companies even for any type of policy related issues the client will also try to get the resolutions through the said broker. The broker is supposed to do all that an agent does for the insurance company. He is open to the client in making his decision of choosing the insurance company (Chapter 5 & 9).
New business quotations have been already provided to potential clients and they being valid as within 30 days clause of validity. The insurance company is supposed to respect these valid quotations if any of the recipients is interested to get a new policy done and in that case the new policy will be booked under the broker’s code only as the broker has initiated the business. But this new policy will be issued through the broker’s office only as the initial discussion was done on the policy by the broker with the said client. Once the contract is terminated the insurance company has the responsibility to inform the third party. Here the quotation placed by the agency will have to be withdrawn by the agency itself.
Hence the said client will also be catered to by the broker although the agreement has been terminated mutually by both. But in case the client decides that he is not interested to take the new policy from this insurance company from which the insurance broker has already terminated his agreement. The client may be on knowing this may decide otherwise to have some other insurance company’s quotation as the broker is also working for other insurance companies and he can take any policy from any other insurance companies. But in case the client wants to have policy from this insurance company only, the broker will be bound to help the client to get the new policy as per the quotation give to him.
Any type of mid-term alterations to the existing policy holders can be done by this insurance company although the broker’s agreement has been terminated by both. The policies held by the present and existing clients are valid and are in force hence any changes or alterations or any endorsements can be done in these old policies and in such policies endorsements the brokers engagement is very nominal as the clients will be approaching the insurance company directly or may be if the arrangement be so that they may approach the broker to get the alterations or endorsements done in the policy through the broker. In such cases the broker will and should help out the clients with an idea that he acts on behalf of the clients and not the insurance companies and in future if he caters these clients then they may approach them to make new insurance policies in future from other insurance companies for whom he is still working.
The midterm alteration of the policy by the client will have to be informed to the broker. The broker has terminated the agency agreement with the insurance company and therefore the termination factor has to be intimated in due course to the clients by the agency and the insurance company. The client can approach other agency or deal with the alternation issue directly with the insurance company. Any type of alterations is to be required to be done and this does not have any relation with the broker in general as this is a subject matter between the insurance company and the insured only (Chapter 5 & 9).
Policies for which the renewal terms are already accepted by the clients means that the existing clients unaware of the insurance brokers agreement termination with this insurance company have accepted the renewal terms for the existing policies. These policies will remain valid for the next period till renewal or if the client so needs can take up a new policy with the broker but with another insurance company by using the portability facility to make the new policy valid under the broker. The renewal of the policies will have to be dealt in the same manner as in case of alteration of policies. The insurance company has the responsibility inform the insured about the termination of agency contract. The insurance company can ensure the renewal of the policy with the insurance company.
The broker is the agent of the insured and not the insurance company hence he may opt to have the relation with the new insurance company through the broker only and will not accept any renewal terms next year or at the time of renewal whichever is earlier (Chapter 5 & 9).
The policy holder have used the property and stayed there during the taking of the policy and at that time he was a resident of that property and was not having any intention to leave the property to stay at any other place. But it is ultimately his property and he can take a decision of staying there or leaving that place and staying elsewhere but letting his friend stay there with his belongings. The owner of the property is staying at a different place with his belongings but his friend is staying at this property along with his belongings and during this stay of the friend with his belongings the property owner did not informed the insurance company. The fire broke out in the meantime when the friend was staying as a tenant. The policy holder has the responsibility to inform about change of occupancy. The insured shall not be negligent. However it would certainly be difficult to prove negligence behaviors. Occupiers Liability Act 1957 clearly suggests that owner cannot deny the personal injury to the person who is using the premises. The insurance company will be liable to pay for the damages.
The property owner has raised a claim for the fire damages to his property as well as on the belongings of the friend cum tenant. The insurance is normally done on the basis of the insurable interest on any items of insurance whether it is life or it is any general item. But in the case of the insurable interest there is no need of any insurable interest is declared by Insurance Contracts Act, 1984. Hence the persons are also not to be named in the policy for getting the benefit in case of damages. The legal case of Donoghue v.Stevenson (1932)
(i) The insured property owner have not disclosed that he has let out the property to his friend on rent and that is also on unfurnished manner but this is an innocent non-disclosure and this has not affected the policy as a whole as an innocent non-disclosure is acceptable by insurance company and any claim therefore is accepted by them.
(ii) The insured property owner has taken up dangerous driving recently but after taking the policy and before the fire broke out in his property. Hence this non-disclosure has not affected the policy at all and this also has no relation with the present situation at all. This disclosure does not affect the policy at all as this is not related to anything to with the combined policy of the house property and its belongings. (Chapters 6 & 7).
(iii) The insured property owner have already raised claim for the property as it is largely damaged by the fire as also its content belonging to the tenant. The policy is not required to name anybody and hence the policy is covering of house property and its belongings and it was not mentioned or by the insurance law it is not mandatory to mention the name of any person hence the belongings of the friend cum tenant will also be paid by the insurance company along with the house property damages. The insurance law is clear from the point of fact that mere disclosure or non disclosure of the interest does not make insurance claim for damage invalid.
The disclosure is of two types one innocent and the other fraudulent where the intention is to cheat the insurance company and gain from the policy but here the owner have raised the absolute correct claim without any fraudulent activities or attitude. Here there is no misrepresentation but only non-disclosure of innocence of the property owner although it is not mandatory to mention the name of any person whose belongings are kept in the house property for which the combined insurance policy is taken.
The legal case laws can be referred as Smith v. Eric S Bush (1990). This is to be seen by the insurance company if the non-disclosure is having any intention to make gain which out of intentional damage caused to the property in a deliberate manner but if it not so then such non-disclosure is always to fall i the category of innocent type. The case of fraud is extremely critical and this is dealt with very serious importance as this is done to make gain out of taking insurance policy and intentionally damaging property for gain (Chapters 6 & 7).
The insurance policy cover is mainly covering the factory and also third party. The policy if mentions and includes that the rubbish is to be kept at least 15 meters away from the building and this was included as a warranty clause. But the factory owner never bothered to maintain that warranty provisions. Whenever a warranty clause is included then in such cases the property owner needs to take extra precautions to follow such warranty provisions and rules of the policy and hence if such warranty condition is not followed and adhered to then the insurance company can and may decline any claim raised out of any mishap due to violation of the warranty clause. The rubbish stacked beside the factory wall which is as per warranty clauses are to be kept at least 15 meters from the building and the fire took place due to the stack of this rubbish.
The rubbish here becomes the main cause of the fire and hence as it violates the warranty clause it can be somehow taken by the insurer that this violation is against the warranty clauses proposed by the insurer. In this case the insurer is at advantage and they can refuse the claim totally as well as they can reduce the claim ad hoc as per their discretion and management. Mark’s claim may be justified that the warranty covers that rubbish must be kept 15 metres away from the building but it is not mentioned in the warranty if fire takes out of this rubbish then what is the outcome of the policy. Hence this point can become a point of contention between the insurers and Mark both and take the policy resolution to a different effect Napier v. Hunter (1993). (Chapter 8).
The reasonable care should have been taken to avoid the injury inflicted on the employer due to fire broken out in the Mark’s factory. The factory fire borne injury which is also covered by the insurance company and if this was registered in the factory records then the employer would have been compensated properly and in time. But due to negligence in the part of the owner the injury of the employee was not recorded and this employee was laid off after declared medically unfit after two months of the fire broke out in the factory. Reference can be done to legal case of White v. South Yorkshire Police (1999) which justifies that any reasonable care should be taken to avoid any type of damage whatsoever.
The damage caused due to fire should have been recorded and informed to the insurance company within the stipulated time to get the claim for the employee. Hence the claim raised by the employee on Mark is justified and valid but Mark’s claim on the insurance company after two months of the event is not justified as per time clause of the insurance policy if any. The insurance company can refuse to attend the claim due to delay but if so then the owner of the factory is bound to compensate the employee as due to the factory fire only he loses his job and became medically unfit to work. Hence the precautionary measure should always be taken.
The stolen goods preservation is having no relation with anyone of the cases above as this neither affects the fire taking place due to rubbish and also it is not affecting the employee getting injured due to fire in the factory and is laid off by factory owner as he became medically unfit after two months of the fire. If the fire would have broken out due to the storage of these stolen goods then the effect would have been justified on both events. Hence in these two cases the effect of stolen goods is absolutely not related and also not present. The stolen goods kept in the factory may be an insurance policy violation but it cannot be proved as the fire did not affect through the stolen goods (Chapter 8).
Jack a farmer having two greenhouses and these got damaged due to storm and was totally loss for him and due to this he raised a claims on the insurance company to settle his claim and make his loss good. But the insurance company’s loss adjuster have observed that one greenhouse have collapsed due to weakening of the foundation from water seepage on the land from the adjoining neighbors’ field which was unaware to the farmer and the storm helped in the collapse of one greenhouse. The farmer was not at all aware of the foundations weakness problem due to the water seepage from the neighbors’ field beside his greenhouse. The farmer has not done anything to deliberately hide from the insurance company for taking the policy. The insurance company in such case has to admit the claim as there is no violations of disclosure as well as breach of contract or neither any fraudulent act. Legal case can be referred as Brotherton v. Aseguradora (2003). The greenhouse collapse due to seeping of water in the foundations; which is not exclusion of the specific nature.
The farmer was not at all aware that his second greenhouse is under risk due to damage out of defect in design. The other greenhouse was observed by the loss adjuster that its design was defective which was also unaware to the farmer and hence due to that drawback the greenhouse collapsed during the storm. The insurance company in this case needs to respect the claim due to various legal cases where it is judgment is done as that when any material fact was not violated or kept hidden from the insurance company at the time of taking the policy or during the policy running period then in such a case the insurance company cannot deny the insured off his claim. Hence the claim thus lodged by the farmer Jack is valid is supposed to be admitted and paid. Legal case can be referred as the case of Container Transport International Inc. v. Oceanus Mutual Underwriting Association (Bermuda) Ltd (1984). Specific exclusion cannot affect the claim thus lodged by Jack as the specific exclusion does not have any effect on this claim. And this is due to that in such cases specific claims will not have any effect as the case does not fall under the specific exclusion clause. Hence the specific exclusion clause should be more a specific one and not just a vague one as this cannot relate to the exact nature of this claim (Chapter 8).
The principal of indemnity assets when there is loss caused by accident to the property. The insured assets shall be put back to the place where it belongs to. This signifies that the insured shall not receive more than the actual amount of loss sustained. This policy of the insurance company is always subject to the term of sum assured. This can be put into much better terms;
On the happening of the loss the insurer shall try to put back the insured into same financial position which the insured used to occupy before the loss. This can only happen if the insurance is properly arranged and it is done on the full value of the assets.
There are two important terms dealing with such situations. There terms are Under-insurance and restrictive. The insured or the policy holder once sustains the loss; the sum insured is more than actual value of the assets, then the restrictive terms come in to play and the insured will receive only the actual amount of loss. If in case the sum assured is of higher amount than the actual property value, then even the insured will receive the money of actual loss.
The principal of indemnity is carried on in the case of Mueller v. Western Union Insurance Co. (1974). The judgment highlighted some parts of contract insurance. According to the judgment the insured will be fully indemnified in case of contract insurance not accidental insurance and life insurance but the insured shall not be more than indemnified (Chapter 11).
The selection of sum assured for the insurance company is an important part to indemnify the insured. The proper sum assured is the important part and it is the ceiling within which the indemnity will have to be considered. If it is not a total loss of the property then the insurer will pay proportionate amount which is corresponding the ratio between the sum assured and the actual value.
There is no point in terms of the insurance terms to pay for the higher sum assured. The proper valuation of the asset has to be done before choosing the right some assured.
Here in this case Mr and Mrs Hughes insured their property from ATK plc, a UK-based insurer. The sum assured of the policy is divided as following;
General contents: £50,000
Fine art: £17,000
Fire totally destroyed the building but some of the assets are recovered. The 10% of the general content has been recovered from the fire. During initiation of the process of indemnify the following things came in front of the insurer;
The building was insured at the market price but to reconstruct such building the cost will be around £350,000. According to the insurance term the indemnity amount cannot cross the ceiling of sum assured, despite the building reconstruction cost at £350,000, Mr and Mrs Hughes will be indemnified with the amount of £300,000 as it is the sum assured amount.
The value of the general content was £75,000 but the sum assured value is of the general content was £50,000. Mr and Mrs Hughes have been able to save 10% of the general content. Therefore the maximum indemnity amount will be 90% of the sum assured which is £45,000.
The market value of the painting was at £12,000 when the asset was destroyed. The sum assured amount of the painting was of £17,000. The indemnity amount here shall not cross the value of actual loss which is the restrictive price below the ceiling of sum assured. Mr and Mrs Hughes will be indemnified with the amount of £12,000.
The increasing trend of employers’ liability insurance (EL) is in rise. Despite the fall in reported number of injuries, the SMEs in UK have increased the level of claim for personal injuries of the employees. It is completely reasonable that the employees can claim for the damages caused in the workplace. Employers’ liability insurance is compulsory in UK business. The compulsory minimum level of insurance is £5m but most of the insurance companies are offering the insurance at £10m. The workplace need to have an accident book which will be used for recording all incidents.
The information has to be recorded accurately. The liability of the employer increases as and when an employee meets with an accident. The safety issues of a workplace have to be taken on record by the insurance company before insuring employers’ liability insurance (EL). The safety standard of the work place has to be in accordance with the insurance company or else the insurance premium will have to be determined by the insurance company.
Each and every employee working in the work place shall have to have duty of care against the other employee. Even an accident is caused by a fellow employee that can be pursued as a claim. The personal injury compensation caused by the negligence of fellow employee then doctrine of Vicarious Liability can be brought against the employer for the negligence (Chapter 12).
In order to apply Vicarious Liability the negligence of the employee must be in course of his employment. The negligence of the other employee or self induced conflict and hurt can be compensated if it is proved that it has significant impact on the health of the other employee. In the case Page v. Smith (1996) House of Lords established the fact that the primary victim need only to show personal injury caused by the negligence of other employee. The impact of the injury is foreseeable or not is not deepened on the primary victim.
Here in this case the personal injury caused by a fellow employee. If that injury was due to the negligence, then the primary victim shall have to be compensated for the injury.
The water damage has been caused by the plumber. The damage is worth of £1,500 to a household policyholder. The loss was not covered by the policy term. The important aspect of the policy term is that it will always be followed by the insurance company. Another important aspect of the case is that the policyholder is in breach of the unoccupancy clause. According to Donoghue v. Stevenson (1932) the damage caused by negligence is covered.
The damage cussed by the plumber is not covered under the insurance term. As the insurance company will be bound to follow the terms of insurance, therefore policyholder will not receive the damage worth of £1,500.
The fire insurance protects the interest of the building owner. The principal of indemnity in general insurance comes in when the loss was caused by an accident. Accident is the term which cannot be done intentionally but negligence can be the reason for the accident. The insurance company shall have to put back the asset where it belongs to. The insured shall not receive more than the loss it sustained and there is one important term of sum assured also comes into play.
The logic of the general insurance is to put back the insured into same financial position as it was before the loss. The valuation aspect is the important part of general insurance. The excess sum assured will not help the insured to claim the higher amount but the valuation of damage will come into play. According to Smith v. Colonial Mutual Fire Insurance Co (1880) two important terms Under-insurance and restrictive comes in case of indemnity. The damage here is caused by the tenant accidentally. The insurance cover is mainly to protect the property against any damage. The unintentional or the accidental damage is covered under fire insurance. Therefore the claim of £250,000 to a landlord whose property was damaged by fire is valid claim (Chapter 12).
The importance of the contractual term is important to recognize the liability and the obligation. Here in this case it can be found that the contractual term has the binging to bring it to the attention of the other party. The injury to the party is one important aspect of the contract law. The visitor visiting the area had no such option to see the terms of visiting the place. According to Chapleton v. Barry UDC (1940) claimant can ask to the compensation as he was not been aware of the terms of visiting the place or he neither been made aware of that.
Here in this case the car part had sign with a disclaimer notice. There will be no repudiating all liability relating to visiting the place. The obligation of the management or the owner of the premises is to ensure that the place is protected and every visitor is made aware of the situation that can cause injury to the visitor. The role of the owner is not restricted; he has to play an important role in handing the situation. If the visitor is not made aware of the situation, the he will have to pay compensation for the damage. Here in this case there was a caution board in the parking place. The visitor was aware of the risk but still he could not avoid the accident that inflicted damage. The visitor has to be cautious against such risk. The board limits the responsibility of the owner to pay for the damage caused to the visitor.
The caution was good enough to aware the visitor about the damage and its obligation. The responsibility of the owner was well shared but the visitor could not help him to save from the accident. Here the damage is caused by the uneven surface and hence visitors have no claim (Chapter 4).
Here in this case DEF plc shorted fuel but accidentally an escape of fuel from the tank caused severe damage to the property of neighbor. The tanks were in good shape but still the oil escape has caused damage to the property of the neighbor. This is an important responsibility to be shared by the company. The responsibility comes with the tort part. The company cannot avoid from the payment of compensation. The extra cushion should have been taken by the company to protect the fuel tank. The negligence on the part of the company as it was sure of the quality of the tanks and therefore did not give careful consideration about the tank and the risk involved in escaping oil. The escaping oil has significant impact on the neighbor and that inflicted damage. This is a significant part which needs to be dealt with. The company has to pay for the damage it caused due to negligence.
This case is related to the Tort cases. The negligence is important here that is the prime cause of the incident. Occupiers Liability Act 1957 does allow that person may exclude liability caused by the negligence only if it can prove that the exclusion was reasonable. The important aspect of the law is to be followed to understand the relation between the damage and the negligence. According to Smith v. Eric S Bush (1990), the negligence of DEF plc cannot be denied. Therefore it is important establish the damage and the compensation caused by the damage.
The food poisoning is has significant liability including the criminal liability. Here in this case DEF plc which is the manufacturer of foods has found out that recent manufactured foods were poisoned. The reason of food poisoning can be tracked to the stock of the foods received from the supplier. There cannot be an exclusion of DEF plc on the ground that the raw material was contaminated or poisoned.
Each and every company supplying food or manufacturing food needs to take the extra burden of quality checking. The lab testing of foods and the raw materials are important practice that each and every company shall adopt but it was not applied by the company. The food poising case was registered against the foods prepared and supplied. The need was to ensure that food does not harm citizens. Here due to negligence of the company poisoned food caused great damage. The liability of the company increases significantly and this liability will not be limited to paying of compensation. The duty of care automatically comes to the manufacturer. The testing of the product was important before releasing to the market and even the stock should have been texted before the manufacturer. The responsibility of the quality rests with DEF plc. According to the judgment of McLoughlin v. O’Brian, the responsibility of the manufacturer is to ensure the quality of the product to be manufactured or supplied. The duty of care shall be there. (Chapter 8 and 11)
The duty of care is important aspect of the business. The construction company should have ensured the fact that it can deal with enough responsibility to provide good quality construction. The warehouse was damaged and cracks came in the warehouse. The responsibility of the owner was so significant. The owner insured the property. The insured property if impacted by any damage insurance company shares the responsibility of paying for the damage. Here the damage was caused by the negligence of the builder but the owner of the property will receive the insurance claim as he insured the property and the insurance company saw the quality of construction. The loss caused by the damaged will be indemnified.
The principal is motioned in the case of Castellain V. Preston (1883). The judgment highlighted some parts of contract insurance. The duty of care is with the construction company while putting up the structure. The testing of the product was important before releasing to the market and even the stock should have been texted before the manufacturer. The warehouse was built by DFK plc. The cracks in the wall have to be insured. The important aspect of the insurance business is to ensure that loss caused by the damage has to be indemnified.
The judgment pointed out the fact that the insured will be fully indemnified in case the property is damaged but important fact of the indemnity is that the insured shall not be indemnified more than the loss. The construction company has its responsibility. The warehouse construction is insured by a UK-based insurer. The need was to ensure that food does not harm citizens.
Here due to negligence of the construction company it caused damage to the property. The liability will increase significantly and should not be for paying compensation. The reason for the loss of the assets has to be verified and the loss caused by the negligence of the builder shall not go unnoticed. The damage caused by the crack in the building can be indemnified by the insurance company (Chapter 8, 11 and 12)