Before commencing work you need to fully familiarise yourself with the ‘Mixed assessment candidate guidelines’, including:
- Font type and size to be used in your assignments (Arial – size 11)
- Rules relating to referencing third party work
- Penalties for contravention of the rules relating to plagiarism and collaboration
- Deadline for the submission of coursework assignment (within 6 months from enrolment date).
- Answer the precise question as worded – marks will not be awarded for irrelevant material
- Check the number of marks allocated to each question and ensure that your answer is sufficient in its scope and depth
- This assignment consists of 10 questions which range between 10 and 30 marks
- Learning outcomes 1 and 2 form the foundational knowledge for all other learning outcomes
- Questions 1 to 8 follow the syllabus learning outcomes 3 to 10 in order
- Questions 9 and 10 encompass a number of syllabus learning outcomes
- The total marks available are 200. You need 120 to pass this assignment
- There is not always a single correct answer for the questions and marks will be awarded for all valid responses.
Start typing your answer here:
Question 1 – Learning Outcome 3
One of the torts that Giles may have committed is that of negligence, which entails omission of acts that lead to a breach of duty of care that result in harming individuals or the society. This is evidenced by Giles lack of repairing his rusty and leaking oil tanks and use of agricultural chemicals harmful to the environment. Secondly, it is possible that Giles committed the tort of private nuisance, which entails activities that hinder people from using or enjoying their land. The main form that the defendant could be charged with is allowing harmful things to escape from his property that result in interference of private property. This is because the oil and agricultural chemicals and pesticides act as an interference and contaminant to the houses in the neighbourhood. Giles also committed public nuisance since he was the reason why the rivers were contaminated, thus unsafe for the fish.
Stating the torts that Giles has violated is not adequate. Both parties should refute Giles claims that he cannot control the weather through stating that even flooding is an act of God, he contributed to the damage caused by the floods. It is therefore important that the two kinds of claimants develop an argument that evidences that Giles committed the torts. The residents of nearby housing estate should prove the tort of negligence through showing that Giles breached a duty of care. Everyone in the society has an obligation of taking care of the environment and preventing pollution of lands that are owned by other individuals in the society. This could be reinforced by quoting Helen’s Smelting Co. v. Tipping (1865) case. When Giles, who had the knowledge that the area flooded, used the agricultural chemicals and did not repair his tanks, he showed little concern for the welfare of the environment. The breach of duty resulted to damage on the plants and buildings. Consequently, there was commitment of private nuisance, since the inhibitors could not use their land to plant trees and other plants. Moreover, the buildings incurred damages, such as oil marks on the walls that interfered with the decor.
The agent of the Angler’s Arm, on the other hand, should exhibit the negligence and public nuisance of Giles. Through his carelessness, the water that flooded contained chemicals and oil that are a danger to the survival of fish. He therefore beached his duty of promoting environmental sustainability. As a result, the owner of angler experienced an economic loss as the anglers no longer came to the house since there was limited number of fish. In regard to Giles being a public nuisance, the agent could exhibit how the Angler’s has been experiencing reduced sales and profits since the rivers are unsafe for fish. Thus, there is evidence of ‘special damage’.
Question 2 – Learning Outcome 4 (10 marks)
Binding contracts can either be unwritten or written. In the case of Charlene, making a call and coming to an agreement did not necessarily require a written document. In the hospitality industry today, both customers and hotels have been increasingly using the advanced technology to enter into binding and valid oral contract. The agreement, in the case study, entailed an offer, the offeree and the offered. When Charlene made the call, she proposed an offer of booking hotel rooms. After the hotel accepted the offer, a contract was formed. The contract formed is in light with some of the basic elements of the contractual law. For instance, both parties had intent of forming a legal relation at the time of the contract. The individuals also had a contracting capacity since both are above the minority age 18 and are of sound mind.
After the formation of the contract, Carlene had an obligation to ensure that her family members were aware that she had booked the rooms for them, and the period and dates they could occupy them. This would help eliminate the chances of breaching the contract due to lack of knowledge. The family members, on the other hand, had a responsibility of adhering to the terms of the contract. Lack of adhering to the requirements would result in breach of the unwritten agreement. Consequently, Charlene would be liable to pay the damages. Charlene also had a responsibility towards the hotel, where she had to meet the set requirements and enable the hotel to meet its part of bargain. Moreover, she had a responsibility to pay the agreed cost of accommodation. The hotel, on the other hand, was obliged to reserve the rooms for the family members as paper the agreement. Moreover, it had to supply its services when the family members occupied the rooms as agreed.
When Charlene called to cancel the reservations, she breached the contract. Such an action is liable for payment of damages. This is similar to the recent case of Kmart Data Breach deal where the company had to pay US $5 million to banks due to breach of contract and the associated damages. However, in Charlene’s case the hotel’s standards and terms of cancellation are not binding since she was not aware of their existence nor did the hotel make an effort of enlightening her before the contract. The terms could only be binding if the hotel had emailed them are detailed her about their provision before the contract was formed. Nonetheless, this does not clear her liability for payment of damages caused. If she had not placed the booking, the hotel could have accommodated other clients. According to the International Forum of Travel and Tourism Advocates (IFTTA) and the UK Consumer Laws that govern the business-consumer relations, any party that breaches a contract is liable to payment of damages. Charlene should pay the agreed price. However, the amount is subject to change after consideration of various factors. There should be exemption of the VAT since no services and products were supplied. Moreover, if the hotels were able to rent out the rooms to other parties, the fee should be reduced from the recovery loss to eliminate an instance of the hotel benefiting twice. The management should also take into consideration the time the customer cancelled the booking. If she did it a few days earlier than the accommodation date, the management should reduce the amount further.
Question 3 – Learning Outcome 5 (10 marks)
Agents are persons who act on behalf of other people. The transactions they engage into, whether buying or selling, is on the account of the principals. They also perform these activities according to the instructions they receive. Thus, their duties involve obeying principal’s instructions, exhibiting proper care and skill that would contribute to the interest of the person, acting in good faith, performing duties personally, and accounting for the funds they receive. On the other hand, they have a right to remuneration and indemnity.
From the case study, John was acting in full capacity as Kelly’s agent. The form of agency was created through an implied agreement since he had worked on numerous deals for the model on previous occasions. Occasionally, Kelly could ask John to purchase cars for her and in return she would pay him an amount that was equivalent to10% the value of the car. Thus, on a number of situations, John acted on the implied authority that Kelly granted him. Although there was absence of a written contract, the oral agreement was always biding as each person met the implied and set requirements.
In this current scenario, John still acted as Kelly’s agent. He acted on Kelly’s need to acquire a Rolls-Royce model that was rare but outstanding. Under the implied authority that John possessed, he managed to acquire the model from Edward. He operated using an undisclosed principle in good faith since he targeted at reducing the acquisition cost for Kelly. Through the knowledge he possessed about cars and insurance, he obtained an insurance policy under the name of his Principal, thus showing care.
Nevertheless, Kelly terminated his agency due to bankruptcy. Due to loss of her job and shortage of funds, she breached the unwritten contract that existed between them. She claimed that she could not pay John and cover the operational costs such as the transport and insurance expenses. This action violated the rights of the agent. She also refused to pay for the car, which John had promised Edward that he could pay by the end of the week. Evidently, the contract was biding to both parties since they operated under the terms set in previous contracts. Kelly therefore has a responsibility of meeting her part of bargain, where she would pay for the servicing expenses, insurance policy, and award him his commission.
Edward, on the other hand, was unaware that he was selling the Rolls-Royce to Kelly. He handled the business as though he was selling the product to the agent. Lack of receiving the money as promised could prompt him to sue John. This is possible if he views John as the principle and the agent chooses to conceal that he was acting on behalf of Kelly. Moreover, even after he becomes aware that John was acting as an agent, he could still choose to sue John. The third party can choose to sue Kelly after he is aware that John was her agent. The agent got into the contract under the instructions of the Principle, thus, Kelly has a responsibility of making payment to the third party. Moreover, John’s activities show that he was acting in the interest of the principle and not for his own gain. If that was not the case, he would have not acted under an undisclosed principle, thus Kelly could have been charged more. It is therefore advisable that Edward legally enforces the sale of his car to either John or Kelly if her identity is disclosed.
Question 4 – Learning Outcome 6 (30 marks)
- Andrea’s Insurance Policies
For an insurance policy to be formed, it must meet numerous requirements. There must be offer and acceptance, and the individuals involved should have a capacity to contract. Another important factor of consideration is insurable interest. The person who insures should be in a position whereby if the event they insured against occurred, they would suffer loss. In the case of Andrea, insuring against a diamond ring in the street brings the question whether loosing it would result to her feeling of lose. She did not invest in its acquisition nor is she the legal owner. Thus, the English law is against such kind of insurance because the possibility of being careless with the ring is high as the person could only be concerned about getting the benefits.
The life policy of her eldest daughter is dependent on numerous factors, one of them being the contractual ability of Jen at the time of purchasing the policy. If she is a minor, the mother could apply the insurance; however, she would not be bound by it once she belongs to the class of the majority. Moreover, there is a consideration of the prime interest of Andrea in purchasing the policy. From the case, it is evident that her main interest is the continuity of the family business. Loss of the life of Jen would mean that her daughter cannot look over the interests of the business. She could not feel the loss of her life at a personal level since her prime concern is the business. This is against the Life Insurance Act 1774, since the mother could be gambling the life of her daughter against the benefits and interests stated by the policy.
Temporary insurance of goods falls under the category of Bailers. Andrea could be looking after the Ferrari out of gratuitous act for her business partner. Since the car is in her position, she has a responsibility of taking care of it as her own possession. Loss of the car may result to her experiencing economic loss as she would have to acquire another car for George. Her interest, therefore, in purchasing the policy, would exclusively be for the safety of the Ferrari.This type of insurance is legal since it is provided by the English law.
Gavin’s life insurance relies on the interests Andrea holds. There is a probability that she could be gambling his existence, either due to his medical condition or age. Moreover, her interests could either be in the gardening services she receives or just a concern for his welfare. However, since the relationship between them is only business, Andrea would not be at a position of collecting the insurance premiums after the death of Gavin. Nonetheless, the English Law provides that Andrea can insure against the life of her employee given that during dismissal, the legal right against her would be equivalent to Gavin’s monthly earnings.
For Andrea to take a life policy of Freda, she has to take into consideration the provision of the law about creditor-debtor insurable interests. In this case, Andrea is the debtor since she owes Gerald £800,000. The condition that Gerald gives is that he would not ask for money as long as his wife is alive to support him. Thus, in this case, the debtor has an insurable interest in the life of the wife of the creditor. In case of loss of the life of Freda, Andrea would receive the premiums. However, as in the case of Hebdon v. West (1863), the conditions are not legally binding due to lack of a consideration. Even after the death of Freda and acquisition of the premiums, Andrea would have to clear her debt. Hence, the insurance policy is not valid under the English law.
- Ned’s Case
From the case, the key legal issues entail the question of misrepresentation through disclosure, a breach of duty, negligence and moral hazard. Although the insurers hold that there was a breach of duty, this is not the case since the manager was unaware of the history of Ned. Thus, there is no evidence that there was misrepresentation of the WXY branch. The only misrepresentation that is evident is the disclosure of information by Ned and employees who knew about his criminal activities. The persons did not tip the manager on him being a habitual criminal and was therefore increasing the risk of the organization. However, there was negligence due to violation of the manager’s duty to investigate the background of the employees. Even though he claims that the organization has numerous employees, running background checks would eliminate instances of occurrence of a moral hazard.
Considering that there was no breach of duty, rejecting the claim or rescinding the cover would result to the insurers breaching the contract. It is important that insurance companies operate under the assumption that both the insurer and the individual applying for the policy are bound by the duty of being open and honest in their operation. For the company to assert that the insured has breached duty, it has to come up with substantial evidence. Lack of the evidence would require the insurer to continue working in good faith. Making and operating on assertions and accusations that do not have a basis would result in breach of contract. This is because the insurance company has a responsibility of catering for the cost of the goods stolen. Rescinding the cover on the branch would indicate that the company looks after its interests since it would be willing to work with a branch that does not have issues of security.
Additionally, breach of this duty does not guarantee the innocent person a claim on damages. This is because the duty is only a concept and principle that employees and consumers of insurance companies operate on. It is not provided in the Consumer Insurance. However, the breach is not evident in the case since the manager did not hide details on Ned’s background. Immediately he was aware of his deed, he notifies the insurance company. He neither participated in misrepresentation nor in concealment of data. Some employees on the other hand were guilty of disclosure but could not act on behalf of the firm since the manager is the figure-head. The manager, on the other hand, is only liable for negligence. He employed a new person without background checks. This resulted in increased insecurity within the organization. If the manager had been keen on assessing the skills and talents that the organization acquired, he would have been aware of Ned’s criminal activities. Consequently, the case of theft could not have taken place.
Question 5 – Learning Outcome 7 (20 marks)
Insurance firms embrace warranties as they reflect the promises the person who purchases the policy make in respect to the safety and security of the life or goods insured. The insurers, on the other hand, help in development of continuing warranties that target at managing the insured. In Joan’s case, she had agreed to improve the safety of her household by always activating the burglar alarm when she left the house without anyone. According to the Insurance Law 2015, persons should always comply with the requirements of the warranty without any exception.
The breach of warranty results in automatic termination of the insurance cover. The time of the breach marks the exact time the cover terminates. Thus, the moment Joan left the house without turning on the alarm marked the time the household was no longer under the purchased policy. Thus, any loss or damage to the goods would result be Joan’s liability. The insurer cannot therefore pay for the goods stolen when Joan forgot to switch the alarm. The company is therefore justified to deny liability due to breach of warranty. This is similar to the Printpak v. AGF (1999), where the insured breached warranty through lack of ensuring that the alarm was fully functional when the area was closed. The insurers ended the contract and did not pay for the damages associated to the warranty breach.
When one insures a good, the insured should ensure that the product is placed in good use. Moreover, it should only be placed into its intended use. However, this is not the case with Bob. He wilfully took the antique vase and smashed it because he lost his temper. This was an action that would have scared Joan and would easily pass as battery, which is an illegal act according to the constitution. In an insurance contract, evidence of involvement of the insured object in a criminal act may result in lack of compensation. Additionally, insurance companies do not cater for loses that are caused by the wilful misconduct of a person. The policies only exist for accidental occurrences. Wilful activities entail a breach of warranty, thus there is increased liability of the insured.
The lack of compensation for criminal activities is provided by the public policy that protects the insurers. In case they were to pay for damages caused by wilful misconduct, there would be an encouragement of persons to stop taking responsibility of the insured since they would easily place claims that would help in recovery of the item. This concept would also promote malicious interests as it would be a loophole for gamblers to acquire funds. The policy is evident in the Beresford v. Royal Insurance Co. Ltd (1938) case. According to the case, although the company had provided that it could pay for wilful misconduct, the judge held that such an action would result in the offender obtaining compensation due to performance of a criminal activity.
Evidently, the insurers can legitimately deny liability on the
grounds that the smashed vase was a result of a deliberate criminal activity
that the policy did not cover.
Question 6 – Learning Outcome 8 (20 marks)
- Bill Case
Bill has lived in a house for over thirty years and had put himself under the cover of household insurance. Whenever a person considers taking a cover by means of insurance, there always has to be determined that a potential of risk exists. The fact that Bill even took a household insurance cover is in itself proof of the fact that chances of risk in living in the house exist. Every incident that result to an insured person suffering damage always has a cause. Regardless of the cause of the damage or risk for which Bill is insured, when the damage occurs, the insurer is liable and should have him covered. The insurer claims that the collapse of the house had been caused by use of defective materials. This means that the insurer is shifting blame to the construction company. This defeats the basic principles of insurance since Bill did not seek insurance cover from the construction company and does not pay premiums to it. Instead, he pays to the insurer for the particular risk that has now happened and regardless of causation, has to accept liability. After settling Bill’s rightful claim is when the insurer can look into the causation of collapse of the house and sue the construction company under the principle of subrogation.
- Sheila’s Case
Sheila’s terms of insurance clearly highlight a risk eventuality emanating from “accidental, external, visible and violent means.” The circumstances of Sheila’s disablement manifest features of the conditions of laying an insurance claim. From the first incident of falling off from her bicycle, it presents a violent scene that is purely unintended and therefore accidental. When she submits herself to hospital, it is not her duty to understand what other patients are ailing from. In fact, she expects that a hospital is the best place she can be if she has to recover from the injuries she sustained from the bicycle accident. Having to contract a terrible ailment in hospital was therefore a result of the fact that she had an accident in the first place. If she had not had an accident, she would not have had to go to hospital and have to contract the disease that has her disabled. The insurer therefore has to take liability for the accidental, external, visible and violent bicycle accident that was the predisposing factor for Sheila to contract the disabling disease. Furthermore, if she had not gone to hospital, she probably would have been disabled by the injuries she sustained and going to hospital was a way to prevent it.
c. Ben’s Farm Case
This is a case of an insured taking measures to avert a risk or at least minimize the severity of the risk in case that it ends up happening. In essence, the law does require an insurer to cover an insured when he takes measures that maybe extraordinary but reasonable to in this regard even lower the cost that the insurer would have incurred if the insured risk happens. Ben therefore sees that the violent storms are apparently about to burst the river banks. He had sought insurance cover against eventualities of flooding and this is a major boost to his claim for reimbursement. Sure that flooding would definitely occur and destroy his crops that would have been due for harvest shortly, he takes preventive measures. By contracting a firm to raise the river bank, this can be perceived as a measure by Ben to protect his crops. However, in itself, he protected the insurer from having had to pay him damages that would obviously have been costly if the insured had not prevented flooding. This means that if Ben had done nothing and the crop had been destroyed, he would have been comprehensively compensated and therefore loose nothing. It would have been the insurer that would have been at loss which thing Ben averted. The company is the one that has benefited the most from Ben’s preventive measures and is in this way liable.
Question 7 – Learning Outcome 9 (20 marks)
The issues in this case revolve around the terms of the insurance policy. As such, liability for the damages following the accident Roy’s Rolls-Royce car has already been admitted by the insurer. However, the extent of insurance coverage is in dispute based on the perception of the terms upon which the insurance policy was bought by the insured. Apparently, the insurance policy caters for the repair or restoration of the asset to its original condition as before the accident. However, in the course of doing this, various stakes are involved given that the business interests of the client in keeping his business running are at stake. On the other hand, the insurer is seeking to minimize the cost of having to mitigate the damages due to the accident for which it is liable. However, the liability of an insurer is always limited by the extent to which the terms and conditions of the policy go. An insurer follows the script because they want to avert chances of incurring costs for which they are not liable. The terms of the agreement only go as far as having to repair the vehicle. The insurer usually reserves the right to determine what best serves its finance interests when it comes to whether it has to repair the vehicle or rule it write-off. This depends on whether having to repair the vehicle leads the insurer to incur more costs than the value of the car before the accident. The issues of delay to have the car repaired and delivered back to the insured is out of the scope of the insurance policy as it entails contact with agents and factors that may be out of the power of the insurer to control. In this case, the insurer cannot dictate the availability of the spares as and when the insured has had an accident and requires his vehicle repaired so he can continue with his business. This means that the delay in delivering back the vehicle after repair was due to extenuating circumstances from which the insurer can be absolved any blame.
The other issue is with regard to the diminished value of the car following the accident for which the insured is laying claim to be paid. In essence, the insurer by all means admitted liability and committed itself to repairing the car as stipulates the insurance policy agreement. The insurer ensured that he looks for the available spares original to the vehicle and this was to no avail. However, he still went ahead to order for modern spares special to the car at a high cost. The cost of the spares was as valuable as would have been if they had found the original ones. This means that the company was all out to ensure that it keeps its part of the bargain and it did by exploring the best available solution. With the cost of the spares and the effort it took to purchase them, the value of the car is still high.
To blame the insurer of incompetence for having delayed in delivering the car on time is inconsiderate on the part of the insured and an act of malice rather than good faith in the circumstances of the case. Even so, the company was not bound by any provisions of the policy to deliver the vehicle within a stipulated timeframe. Thus far, it did everything in its ability to have the insured compensated for his loss within the provisions of the policy. It was not possible for both the insured and the insurer to anticipate a situation where spares for the car would be out of the market. And it should be appreciated that the insurer was in deed doing everything in his ability to avert inconveniences to the client but playing within the terms of the policy agreement. While it is an insurance company, it is not a maker of automobile spares and relies on outsourced agencies which makes accusations of incompetence invalid and illogical. This means that the insured is effectively compensated with high value and tailor-made spares for his car and cannot claim additional payment on any established grounds of the policy agreement.
Question 8 – Learning Outcome 10 (20 marks)
- Contribution from AX
In the occurrence of an accident, it is required of the insured to immediately notify the insurer. The insured is even required not to try to repair the car since the insurer may sent an inspector to assess the extent of damage and initiate a compensatory process. In this case, the insured contacted the DL as his insurer. He however was still attached to another insurer with a renewal that he did not have knowledge of. This was AX that in essence should have been involved in the damage claim of the insured but was not due to the stated reason. In processing an insurance claim of an insurer, the insurer tries to establish if there could be another party that could be involved to share liability for the damages. The reason being that the admission of liability by one insurer should not be to the effect that it helps another liable insurer to avoid responsibility. Again, the subrogation principle exists to ensure that an injured person or the insured does not benefit twice as much or get “double recovery”. If DL does not follow up on the other insurer, AX, the insured could later seek payment from AX and this will mean that he will make a profit out of the loss having already been settled by DL. This contravenes the presumption that insurance has to recover the actual damage of the injured party not make them realize a profit. Having already settled the insured irrespective of the condition that it is exempted from liability when the insured is entitled to an indemnity under any other policy, DL has a right to press AX to share in the liability and remit a contribution. Both insurers stand in a similar position only that one was notified and the other was not which really is not as big a consideration.
Further, in the circumstances of the case, John also just realized that he has an indemnity entitlement with AX something he had not known. He had realized that he could press Peter to pay for causing injury which he did. This implies that he too could soon or later realize the fact that AX could be liable and start pursuing payment. This validates the fears of DL that John could lay a liability claim against AX and be paid as well. This will lead him to make profit out of his loss that is against the presumptive insurance doctrine. Therefore, John and DL both have a similar case and interest against AX that are founded on the subrogation principle. However, DL has a case against John as they feel he is not entitled to AX’s contribution as DL has already fully compensated him.
b). Claim for recovery of £1,000 from John
The claim to recover the payment received from john is founded in law. This is because DL in its policy exempts itself from liability in case the insured is entitled to payment from another policy agreement. Besides, insurance is supposed to be a joint one if liability is shared among various parties. Essentially, whenever an injury is caused by some party, the insurer is still liable. As such, the accident was caused by Peter yet DL still admitted liability. This effectively bars John from collecting money from the at-fault party and going ahead to pocket it as doing so constitutes a windfall to him. This justifies DL’s pursuit for subrogation rights since John is only entitled to compensation for only the amounts associated with his injuries and put him in the same position as before the accident and not any better. Any other payments outside of these are claimed by DL and in this case are rightful and deserved. DL should reclaim the £ 1,000 paid to John by peter.
Question 9 – Across Learning Outcomes (30 marks)
A liability offers or grants protection for persons other than the ones insured. These persons may include the persons offended by the one insured or employees. In the case of a company, the employees or firms contracted by the insured company are also included. However, the decision of whether the additionally insured persons can enforce the contract solely depends on the agency’s policies. In cases where the additional insured persons have to claim compensation directly from the agency, the agency has to get the consent of the main insured persons.
In case of any incident or event that may lead to a claim, the insured is required to inform the agency within a specific period of time, which is normally between 15 – 30 days. Failure to which the insurers can refuse to ascend to the claim. In the claim, the insured has to give all the particulars or state the nature of the loss incurred. The loss incurred should also fall within the insured perils. The claimant therefore has to be aware of all the insured perils. For the claim to be considered valid, the claimant has to prove that the loss was accidental and not intentional. However, losses caused by intentional actions of close relatives of the insured or his employees are covered, as longs as the claimant proves not involved in any way. Though the main aim of the insurance is to protect the insured against the consequences of his or her own negligence, the insured is required to take precautions to avoid incidences that lead to losses.
In David’s case, his actions may be assumed to be deliberate or intentional. Since his insurer’s policy requires him to take precaution to avoid accidents, David ought to be extra careful in his actions. However, David did not consider the policy since stealing is a criminal offence and he did it knowingly or consciously. It can also be assumed that since David has stolen some commodities, he knocked down sally while in hurry to leave without being noticed. The insurance company could not have considered the claim valid since every valid claim should only consist of insured perils. Furthermore, stealing is a criminal offence that should be condemned in the society. Apart from carelessness, David was not truthful in the claim. In the claim form, he had stated that he had not committed any crime that had led to his conviction in the last five years yet he had been convicted for a crime he assumed was minor and did not matter.
David feels that the agency should indemnify him since he was extra careful and the offence he was being accused of having engaged in four years ago was minor and he thought it had happened more than five years ago. He further claims that the accident was also sally’s Fault. As stated earlier, David was not extra careful since he had stolen from the supermarket and was probably trying to run away. He may also have committed the offence intentionally because he knew there was someone to pay for damages. Sally, on the other hand, is not to blame because it was David that pushed his trolley into her. Arguing that the previous offence was minor, blaming sally and trying to falsely get compensation from the insurer portrays David as an inconsiderate, careless and malicious person.
The insurance agency acted basing on the policies and principles of insurance companies. For instance, a loss is considered valid if it falls within the insured perils. In David’s case, the loss was not valid since his crime was intentional and out of carelessness. One of the principles of liability insurance also states that the insured has to be careful to avoid incidences that cause losses. David, also broke criminal law that aims at controlling the behaviours that threaten the peace of the community. Offences such as murder and theft (committed by David) are governed by criminal law and should be punished. David should therefore be punished in accordance to the law to prevent such from recurring.
Question 10 – Across Learning Outcomes (30 marks)
Fire insurance is protection of property against damages caused by fire. Section 83 of the fire preventions Act 1774 allows a person who has a contract with the owner of a building or is a mortgagee to compel the insurer or the owner of the building to rebuilt or reinstate a building in case it is destroyed by fire. However, this does not mean that the reinstatement is carried out by the insurers. In cases where the insurer does not reinstate the building, he has to ensure that the insured has reinstated it. This can be done through withholding the insured’s claims until he does so. This Act requires the insurer to use the insurance money in ensuring that damaged buildings have been fully reconstructed in cases where they suspect that the insured is to blame.
Jane buys a building which she insures under the fire insurance policy. Unfortunately, the building burns down as a result of some fire from a neighbouring farmers land. In this case, Jane is the owner of the building or the insured and not a lessee or mortgagee. When Jane’s building burns down, her insurance broker claims the cost of damages from the insurer. He further claims that the insurer needed to reinstate the building, according fires prevention Act 1774. However, section 83 of the Act allows such to happen if the claimant is a mortgagee or lessee and they suspect the owner of arson or fraud. The Act does not also force the insurer to reinstate the building. So in this case, the insurer was not obliged to reinstate Jane’s building. Jane’s broker may have also overestimated the cost of the building since the cost of building a new and modern structure that resembles the older one was lesser that the cost of repairing the old structure.
The insurers, on the other hand, offered Jane approximately half of the costs of repair claiming that the claimed amount was too much. The insurer’s claim was supported by the fact that the money they had offered was enough to build a similar structure or buy another structure in another area. The farmer, on the other hand, only offered Jane £50,000 as an act of good neighbourhood. Though he is rich and the fire had from his started, he does not take the responsibility of causing damage to Jane’s property. However, the Farmer may not be to blame because the fire was not intentional as it was caused by trespassers.
Insurance agencies are supposed to consider the interest of the owner in an insured Item or property. Jane’s interest in the building she had recently bought must have been the main reason as to why she decided to insure it. As much as Jane could have bought or rebuilt another structure at a cheaper price, the losses she had incurred had to be considered by the insurance agency. Furthermore, in the contract signed between the insurer and Jane’s broker, the estimated price of the building was clearly stated. This shows that the insurer already knew the cost of the building and had agreed to it by signing the contract. It was therefore wrong for the insurer to estimate the cost of repairs or rebuilding the house with respect to other structures. Since ownership is also an interest that is accepted and protected by law, the insurer was supposed to treat Jane’s case with the expected criticality. The farmer was also supposed to partly take responsibility since he was rich and the damage was caused by fire from his farm.
Beresford v. Royal Insurance Co. Ltd (1938)
Citizens Advise Bureau. (2005). Can you cancel it? CAB/ECC clients experience of cancellation rights in consumer contracts. CAB Evidence Briefing, p8.
Grande, Allison. (2016). Real Losses Bolster $5M Kmart Data Breach Deal, Banks Say. Retrieved on September 10, 2010 from http://www.law360.com/articles/829593/real-losses-bolster-5m-kmart-data-breach-deal-banks-say
Hebdon v. West (1863)
Insurance Law (2015)
Life Insurance Act (1774)
Printpak v. AGF (1999)
Smelting Co. v. Tipping (1865)
 In St Helen’s Smelting Co. v. Tipping (1865), fumes from a factory damaged trees and shrubs, the House of Lords ruled that locality is irrelevant if actual damage is caused to neighbouring land.
 Grande, Allison. (2016). Real Losses Bolster $5M Kmart Data Breach Deal, Banks Say. Retrieved on September 10, 2010 from http://www.law360.com/articles/829593/real-losses-bolster-5m-kmart-data-breach-deal-banks-say
 Citizens Advise Bureau. (2005). Can you cancel it? CAB/ECC clients experience of cancellation rights in consumer contracts. CAB Evidence Briefing, p8.
 Ibid, p13.
 Hebdon v. West (1863)