M05: Insurance Law -Mixed assessment coursework – assignment

M05: Insurance Law -Mixed assessment coursework – assignment

M05: Insurance Law

M05: Insurance Law

Mixed assessment coursework – assignment

Submission rules

Before commencing work you need  to fully familiarise  yourself with the Mixed assessment candidate guidelines.

• A coursework assignment should be between 6,000 and 12,000 words in total, depending on your writing style.
• Font type and size to be used in your assignment (Arial – size 11).
• Rules relating to referencing the study text and third party work, and citing statute law, cases and regulations.
• Penalties for contravention of the rules relating to plagiarism and collaboration.
• Deadline for the submission of coursework assignment (within 6 months from enrolment date).

Important notes

• Make sure you read each question carefully – 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 length and breadth.
• This assignment consists of 10 questions which range between 10 and 30 marks.
• Questions 1 to 8 follow the syllabus learning outcomes in order starting from Learning Outcome 3.
• Questions 9 and 10 cover a number of syllabus learning outcomes.
• The total marks available are 200. You need to obtain 120 marks to pass this assignment.
• There is not always a single correct answer for a question and marks will be awarded for all valid responses.

M05 coursework assignment questions   Question 1 – Learning Outcome 3 (10 marks)
You are a claims handler for XYZ plc, a UK-based insurer.  You are approached by a policyholder who owns and operates a hotel. An employee of the hotel has been  injured in an accident in the hotel’s kitchen,  whilst using an item of kitchen  equipment. The hotel’s Head Chef is concerned that the kitchen  equipment was defective  at the time of the accident.
Explain the legal position in respect of the injured employee in relation  to:
(a)   A claim against the hotel, referring to statute law and one relevant  case.	(5)
(b)  A claim against the kitchen  equipment manufacturer, referring to one relevant  case.	(5)
Question 2 – Learning Outcome 4 (10 marks)
You are an office manager who organised a party, to celebrate the opening  of a new office, to which you invited several  of your major customers. You signed  a written contract  with a catering  company, with whom you have a long standing relationship, to provide food, flowers and decorations for the party. Several hours before the party was due to start the catering  company  called you to advise  that,  due to an electrical  fault in their kitchen,  they would be unable to fulfil the contract. The party went ahead, but considerable additional cost was incurred by you in arranging alternative suppliers for food and decorations. Given the short notice,  the food was of a lower standard than planned and no flowers were available.
(a)   Discuss whether  there has been  a breach of contract.	(5)
(b)  Describe the most appropriate remedy available in contract, referring to one relevant  case.	(5)
Question 3 – Learning Outcome 5 (10 marks)
You are an insurance broker. Your agency agreement with one of your insurers has just been  terminated by mutual agreement.
Explain the legal implications of the following three situations regarding  the termination:
(a)   New business quotations that have been  provided  to potential clients  and which are within the 30 day validation period.	(4)
(b)  Mid-term alterations to policies  held by existing clients.	(4)
(c)   Policies for which the renewal terms have been  accepted by existing clients.	(2)

Question 4 – Learning Outcome 6 (30 marks)

You are a claims handler for an insurer who provides household combined insurance for the owner of a domestic property. The insurance comprises buildings and contents cover. The owner moves out of the property and rents it to a close friend. Subsequently, a fire claim has been  notified.

You have identified the following facts:

• The property is occupied by the tenant on an unfurnished contract basis. The insurer finds out that the property owner has never disclosed the change of occupancy to the insurer.
• The property owner did not disclose to the insurer his recent dangerous driving conviction, which occurred  during the policy period but before the fire.
• The fire caused a large amount of damage to both the building and the tenant’s contents. The property owner puts in a claim for both the building and the tenant’s contents.

(a)   Explain with justification the impact of insurable interest on the claim made  by the property owner. Refer to one

relevant  case.                                     (12) (b)  Explain with justification the extent to which the facts identified are material  and the effect they may have on

the claim made  by the property owner. Refer to three relevant  cases.                                                                     (18)

Question 5 – Learning Outcome 7 (20 marks)

Mark owns and operates a factory for which he has a commercial  combined insurance policy. One of the areas within the factory is currently being used  for the storage of stolen  goods.  The following events occur:

• A fire, resulting in damage to the building, is caused by rubbish stacked against an outside wall of the building. There is a warranty on the policy requiring rubbish to be kept at least 15 metres  away from the building. Mark makes  a claim, to the insurer,  for the fire.
• An employee is injured in the factory whilst undertaking his employment but the injury is not recorded because it is not deemed serious. Two months later the employee is medically signed off work as a consequence of the injury. The employee makes a claim, for his injury, against Mark who then notifies  his insurer.

(a)   Explain with justification why the cover might be prejudiced due to the rubbish being kept against an outside

wall of the building. Refer to one relevant (8) (b)  Explain with justification the effects of the failure to record the injury and the late notification to the insurer of injury. Refer to one relevant  case.                                                                                                                             (8)

(c)   Explain the effect of the storage of stolen  goods  on each of the two insurance claims.                                                       (4)

Question 6 – Learning Outcome 8 (20 marks)

ack is a farmer who owns greenhouses. He has a property insurance policy which includes storm cover for his greenhouses. During a storm, two of his greenhouses collapse. The insurer appoints a loss adjuster who reports that both greenhouses are a total loss. The loss adjuster also advises that:

• One of the damaged greenhouses had its foundations weakened, during the storm, by storm water flowing from a neighbour’s adjacent field. This storm water contributed to the collapse of that particular greenhouse.
• The other damaged greenhouse collapsed in part due to a defective design, with a specific exclusion on the property insurance policy relating to defective design.

Explain how the insurer would deal with the following:
(a)   The claim for damage to the greenhouse which had its foundations weakened. Refer to one relevant  case.	(10)
(b)  The claim for damage to the greenhouse which had defective  design. Refer to one relevant  case.	(10)

Question 7 – Learning Outcome 9 (20 marks)

Mr and Mrs Hughes own a house which is insured with ATK plc, a UK-based insurer,  for buildings and contents, on an all-risks basis. There are no warranties on the policy. The sums  insured are:

• Building: £300,000
• General contents: £50,000
• Fine art: £17,000 (consisting of one painting)
• Jewellery: £10,000 (consisting of a £5,000 watch and a £5,000 pair of earrings)

A fire totally destroys the building,  however, Mr and Mrs Hughes are able to save some of their contents.

A loss adjuster is appointed by ATK plc to handle the claim made  by Mr and Mrs Hughes. The loss adjuster submits an initial report, with the following findings:

• The building was insured for its market value, but the estimated rebuild cost is £350,000.
• 10% of the total value of the general contents were rescued. The total value of the general contents, at the time of the fire, is calculated to be £75,000.
• The painting was insured on an agreed value basis, based on a valuation completed five years ago. However, the market value for paintings by the artist have declined recently and the loss adjuster has established that the current market value is £12,000.
• The watch and one of the earrings was saved, with the other earring from the pair destroyed in the fire.

Explain the basis of indemnity  and method of settlement that ATK plc will apply for each of the following:

(a)	Buildings.	(5)
(b)	General contents.	(5)
(c)	Fine art.	(5)
(d)	Jewellery.	(5)

Refer to one relevant  case  for each loss.

Question 8 – Learning Outcome 10 (20 marks)

You are a claims handler for XYZ plc, a UK-based insurer.  You have received  a number  of claims which you dealt with as follows:

• Payment of £500,000 for personal injury damages to an employee under an employers’ liability policy, where the injuries were caused by another employee. A payment of £300,000 as a capital sum under a personal accident policy, held by the injured employee.
• Payment of £1,500 to a household policyholder who is a long-standing customer. The payment was for water damage caused by the negligence of a plumber, although the loss was not covered under the policy terms and conditions as the policyholder was in breach of an unoccupancy clause.
• Payment of £250,000 to a landlord whose building was damaged in a fire. The tenant under the lease was responsible for reimbursing the landlord for the insurance premiums. It was established that the tenant accidentally caused the fire.

Explain what rights of recovery are available to XYZ plc in relation  to the following payments:

(a)   Employers’ liability and personal accident.                                                                                                                 (10) (b)  Water damage.                                                                                                                                                             (5) (c)   Fire damage.                                                                                                                                                                (5)

Refer to one relevant  case  for each payment.

Question 9 – Across more than one Learning Outcome (30 marks)

You work for BCD plc, an insurance broker. One of your clients  is DEF plc, a food manufacturer. DEF plc has a commercial  combined insurance policy. The following events occur:

• At the entrance to the visitors car park there is a sign with a disclaimer notice repudiating all liability for injury or damage. A visitor has just been injured in the car park due to an uneven surface.
• At the premises there are large fuel storage tanks. Recently there has been an escape of fuel from a storage tank at the premises onto a neighbour’s property. All the tanks were in good condition and DEF plc were not in any way negligent  in the way the fuel was stored.
• Recently there has been an outbreak of food poisoning in members of the public, who have purchased products directly from DEF plc, and the customers of other food manufacturers to whom it supplies ingredients. This food poisoning has been traced  back to contaminated stock at DEF plc’s premises.

Explain to DEF plc their legal position in respect of the following:

(a)   Injury to the visitor in the car park, referring to statute law and one relevant  case.                                                   (10) (b)  Damage resulting from the escape of fuel, referring to two relevant  cases.                                                              (10) (c)   Food poisoning from contaminated stock,  referring to statute law and one relevant  case.                                        (10)

Question 10 – Across more than one Learning Outcome (30 marks)

DFK plc is a long established design  and build warehouse construction company. DFK plc is insured by a UK-based insurer,  for all its commercial  insurances. DFK plc have received  notification of the following three property claims:

• The owner of a warehouse, built by DFK plc ten years ago, has noticed large cracks in its walls.
• A customer has lodged a claim for financial loss due to delays by DFK plc in the completion of a warehouse building contract.
• Loss of turnover from a neighbouring factory next to a DFK plc construction site, where dust from construction activity has entered the factory’s air-conditioning system, causing it to break down.

DFK plc have received  notification of the following two personal injury claims:   • The death of a DFK plc employee on one of their construction sites, as a result of the actions of a sub-contractor.
• A DFK plc employee who witnessed the death has been  signed  off work, long-term, due to stress.
(a)   Explain with justification the extent of DFK plc’s legal liabilities  for each of the three property claims above.	(18)
(b)  Explain with justification the extent of DFK plc’s legal liabilities  for each of the two personal injury claims above,  referring to two relevant  cases.	(12)