Chapter 11 - Insurance law. At the end of this chapter you should understand: how a contract of insurance is made, the term ‘cover note’, the concept of insurable interest at common law and how it has been modified by the Insurance Contracts Act 1984 (Cwlth), the concept of indemnity and its operation in contracts of insurance,...
Trang 1Copyright © 2000 McGraw-Hill Australia
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning
This is the prescribed textbook for your course.
Available NOW at your campus bookstore!
Trang 2Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning
Insurance Law
Chapter 11
Trang 3Copyright © 2000 McGraw-Hill Australia
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning 11-3
Insurance contract
Premium (consideration)
Promise of payment by the insurer
• The proposal is the offer.
• The policy is evidence of the contract.
Trang 4Copyright © 2000 McGraw-Hill Australia
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning 11-4
Cancellation of insurance policy
(via written notice)
• A breach of the duty of utmost good faith of disclosure
• Misrepresentation before the contract was entered into
• Failure to comply with a provision of the
contract
• A fraudulent claim made under the contract,
or under some other contract of insurance
in operation at the time
• Cover note may be cancelled at any time
with three days notice (S60(4))
Trang 5Copyright © 2000 McGraw-Hill Australia
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning 11-5
Trang 6Copyright © 2000 McGraw-Hill Australia
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning 11-6
Australian Prudential Regulation
Authority (APRA)
• Prudential regulator of banks,
insurance companies and
superannuation funds
• Issues guidelines
• Prevents certain promotional material
Trang 7Copyright © 2000 McGraw-Hill Australia
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning 11-7
“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 Service
Insurance brokers – Insurance Brokers’ Dispute
Facility
Trang 8Copyright © 2000 McGraw-Hill Australia
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning 11-8
Fundamental principles of
insurance law
• Indemnity principle:
Insurer agrees to indemnify the
insured for loss on the happening
of a particular event
(Fixed payouts are not included.)
Trang 9Copyright © 2000 McGraw-Hill Australia
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning 11-9
• False statement
of fact
•Knows false or
indifferent • Believes true • Duty of care owed
•Used to induce party
into contract •Used to induce party into contract • Duty breached
•Contract entered • Contract entered • Loss suffered
•Damage suffered • Damaged suffered
Trang 10Copyright © 2000 McGraw-Hill Australia
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning 11-10
Fundamental principles of
insurance law
• Duty of utmost good faith:
Both parties must act in good faith
and disclose all relevant information.
Trang 11Copyright © 2000 McGraw-Hill Australia
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning 11-11
Fundamental principles of
insurance law
• Duty of disclosure:
Non-disclosure of a material fact may
result in a voidance of the contract
NON-DISCLOSURE
liability
Trang 12Copyright © 2000 McGraw-Hill Australia
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning 11-12
Disclosure
Matters 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.
Trang 13Copyright © 2000 McGraw-Hill Australia
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning 11-13
Fundamental principles of
insurance law
Doctrine of subrogation
• Applies 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.
Trang 14Copyright © 2000 McGraw-Hill Australia
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning 11-14
Fundamental principles of
insurance law
Double insurance
• Indemnity 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.)
Trang 15Copyright © 2000 McGraw-Hill Australia
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning 11-15
Fundamental principles of
insurance law
Doctrine of proximate cause
• The insured is covered against loss only if insured against the “proximate cause of a loss”, i.e the first incident causing the loss.
Trang 16Copyright © 2000 McGraw-Hill Australia
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning 11-16
Doctrine of privity of contract
• Only 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 insurance
• Specified or referred to in the contract
Trang 17Copyright © 2000 McGraw-Hill Australia
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning 11-17
• Comprehensive motor vehicle
• Third party property motor vehicle
• Marine
Trang 18Copyright © 2000 McGraw-Hill Australia
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning 11-18
Standard cover
• Insurer pays a minimum amount,
as specified in the regulations.
Trang 19Copyright © 2000 McGraw-Hill Australia
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning 11-19
Renewal insurance cover
• Insurer must notify the insured in
writing within fourteen (14) days
before the cover expires.
Trang 20Copyright © 2000 McGraw-Hill Australia
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning 11-20
• Insurance Contract Act =
Value of property stated in the policy x amount of loss 80% of the actual value of the property
Trang 21Copyright © 2000 McGraw-Hill Australia
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning 11-21
• Professional indemnity insurance
• Public liability insurance
• Product liability insurance
• Compulsory third party motor vehicle schemes
Trang 22Copyright © 2000 McGraw-Hill Australia
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e
by Barron & Fletcher Slides prepared by Kay Fanning 11-22
Insurance provider’s liability