role by xiaopangnv


									Hong was one of the committee in a non-profit company called Dogs for the Disabled
Ltd. This company provides guard dogs for the disabled people living in high crime areas
and who are at risk of being. Because most of the dogs are pit bull terriers or rottweilers,
these dogs have a tendency to be savage and sometimes may even attack their owners.
So Hong now has been asked by the board directors of company to arrange insurance
against the possible liability of the company.

Scheme 1
Board Director: Hong, can you please arrange an insurance against possible liability for
our company?

Hong: Sure.

Hong call up the insurances broker for further information

Hong: Hello Hong here, it this an insurance broker company?

Broker: Yes, anything that I can help you?

Hong: I would like to buy insurance; anyway my company was a non-profit company
called Dogs for the Disabled Ltd. which is provides the guard dogs for physically
disabled people. So do you have any recommended insurance company that suitable for

Broker: Hem... let me see. Ok, we actually dealing with take a risk Pty. Ltd. Which is
one of coverall subsidiaries and which I know has an excellent business reputation?

Hong: oh really? Great! So can you fax me one of the proposal forms from the Take-A-
Risk Pty. Ltd. Company?

Broker: Sure, I will fax you as soon as possible I prepared.

After Hong has received the proposal from the insurance broker and he read it and he
realize that the proposal contain 2 questions that he need to ask board directors to answer.
But Hong embarrass has ignored it question 1 and question 2 he answered “NO”. Hong
has complete filling up the proposal included the premium and send it to the broker, but
the broker forget to included the premium to send it to the insurance company.
Scheme 2 (Argument of refuse meet up the claim)
One month later one of the trainees is bitten by a dog and makes a claim against Dogs for
Disabled and the trainees wanted to claim

TARIL: Hello, Take-A-Risk Insurance. Can I help you?

Hong: Oh, I’m Hong here and I was representative of the Dog for Disabled Ltd.
Company and I wanted to ask why the insurance has refuses to meet the claim of the

TARIL: Oh, really? Let me go find out what went wrong in the process OK? Please wait
a minute.

Hong: All right

TARIL: Hem…Mr. Hong according to the contract between your company and our
insurance company. The contract you have sign in has been cancel because there are
some procedure that you have make a mistake when you filling in the proposal.

Hong: Really? But I have not received any call from your company or broker that I have
made a miss-take in filling up the form and so now you mean I can’t claim even 1 cent
from the insurance that I buy from you?


Hong: OK, fine! I will try any of the way to get my claim back.

Scheme 3 (Explaining the why insurance refuse the claim)
Hong has explained back to the company and try to explain to the board of director.

Board: Hong how is the claim of the medical fees from the insurance?

Hong: I so sorry I can’t get any claim from the insurance.

Board: Oh why? What going on, we do pay out the premium right? Then they should be
insured our losses in this situation.

Hong: But sorry to say that, I have made a miss-take and telling the fact to the insurance
company. When the broker sending in the proposal with 2 question that required member
of the broad to answer it but I have ignore the 1st question and not answering honestly to
the 2nd question. In this case the insurance telling me that the contract between us has
Conclusion According to the Insurance Contracts Act 1984 (Cth), there are 4 basic
principles, Insurable interest, Utmost good faith, indemnity, subrogation.

Insurable Interest (statute of law)
- Sec 16 insurable interests not required, a contract of general insurance is not void
   by reason only that the insured did not have.
- Sec 17 legal or equitable interest not required at time of loss, insured under a
   contract has suffered economic loss by reason that property the subject mater of the
   contract has been damaged or destroyed, the insurer is not relieved of liability. Under
   the contract by reason only that at the time of the loss, the insured did not have an
   interest at law or in equity in the property.
- Macaura V. Northern Assurance Co. Ltd (1925)

Utmost good faint
- Sec 13, the Insurance Contracts Act. Each party are require acting with utmost good
   faint toward one another in respect of any matter arising out of or in relation to the
   contract. The duty breached when the insurer fail to bring to the insured’s notices the
   consequences of a breach of a term of the insurance contract.
- Case Example, Australia Associated Motor Insurers Ltd V. Ellis &Ellis (1990)
   54 SASR 61

Insurance Contract Act 1984 (Cth)
a) Part IV- Disclosures and Misrepresentative
Division 3-Remedies

The duty of disclose
- Common law, Example Case, Marene Knitting Mills v. Greater Pacific
   Insurance (1976)
- Statute Law, Sec 21, the insured’s duty of disclosure
   Subject to this Act, insurance has duty to disclose to the insurer, before that relevant
   contract of insurance is entered into, every matter that is known to the insured being
   matter that:
      a) the insured knows to be a matter relevant to the decision of the insurer
           whether to accept the risk and, if so, on what term; or
      b) a reasonable person in the circumstances could be expected to know to be
           a matter so relevant.
   The duty of disclosure does not requite the disclosure of a matter:
      a) that diminishes the risk;
      b) that is of common knowledge;
      a) that the insurer knows or in the ordinary course of the insurer’s business
           as an insurer ought to know; or
CASE: Edward v AA Mutual Insurance Co (1985)

SECTION 27 –Failure to answer question

A person shall not be taken to have made a misrepresentative by reason only that the
person failed to answer a question included in a proposal form or gave an obviously
incomplete or irrelevant answer to such a question.

Insurance intermediaries: Broker
Previously at common law, it was held that payments to the broker did not discharge the
obligation to pay the premiums. CASE: con- Stan Industries of Australia Pty Ltd v.
Norwich Winterthur insurance (Australia) Ltd. (1986)

In statute law has reversed the situation. Sec 14 say that payment to an intermediary
discharge the obligation of the insured to pay the premium. However, there are still some
problems. CASE: manufacturer’s mutual insurance Ltd. V. John H Boardman
insurance brokers Pty Ltd.

Torts of negligent
   1) Does the defendant own the plaintiff a duty of care?
   2) Does the defendant breach the duty of care?
   3) Does the plaintiff suffer any damaged as a result of the defendant’s breach of the
CASE: Donoghue v. Stevenson

What are the remedies?

Section 28 -General Insurance

(2)If the failure was fraudulent or the misrepresentation was made fraudulently, the
insurer may avoid the contract.
(3)If the insurer is not entitled to avoid the contract or, being entitled to avoid the
contract (whether under subsection (2) or otherwise) has not done so, the liability of
the insurer in respect of a claim is reduced to the amount that would place the
insurer in a position in which the insurer would have been if the failure had not
occurred or the misrepresentation had not been made.

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