M05: Insurance law
Mixed assessment coursework – assignment
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Top tips for answering coursework assignments
• Read the Specimen coursework assignment and answer for this unit, available on RevisionMate.
• Read the Learning Outcome(s) and related study text chapter for each question before answering it.
• Ensure your answer reflects the context of the question. Your answer must be based on the figures and/or
information used in the question.
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• Address all the issues raised in each question.
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separately.
• Where a question requires you to address several items, the marks available for each item are equally
weighted. For example, if 4 items are required and the question is worth 12 marks, each item is worth 3
marks.
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a 30-mark question requires more breadth than a 10 or 20 mark question.
Copyright © 2020 The Chartered Insurance Institute. All rights reserved.M05 coursework assignment questions
Question 1 – Learning Outcome 2 (10 marks)
Simon is a claims handler for TP Ltd, an insurer, and works in the first notification of loss (FNOL) department.
Simon receives a phone call from one of TP Ltd’s policyholders, to make a claim for damage to their
property. The policyholder asks Simon if building repair work on the property can proceed, pending the
outcome of the claim. Simon states that “it can” as he is sure “it will be fine”.
A few weeks later, Simon checks the claim record to discover that the claim had been declined. However, the
building repair work had already commenced.
(a) Identify, with justification, the tort that Simon may have committed. (6)
(b) Explain briefly, the main legal remedy available to the policyholder. (4)
Question 2 – Learning Outcome 3 (10 marks)
Bella is currently employed by KL Ltd, an insurance broker. KL Ltd operates a single office in New Town.
Bella has a contract of employment with KL Ltd, which states that ‘On leaving the firm, employees are not
permitted to work at any insurance broker within 25 miles of KL Ltd for a period of five years’.
Bella intends to resign from KL Ltd and establish her own insurance brokerage in New Town.
Joe, a competitor to KL Ltd, is to buy the insurance broking business from KL Ltd.
(a) Explain, with justification, whether Bella is entitled to establish her own brokerage in New Town.
Refer to one relevant case in support of your explanation. (6)
(b) Explain, with justification, how Joe could prevent the directors of KL Ltd from establishing another
insurance broking business in New Town. (4)
Question 3 – Learning Outcome 4 (10 marks)
GB Ltd is an insurance broker. They engaged a specialist recruitment company to find an account manager,
which led to the employment of Finley by GB Ltd.
GB Ltd recently discovered that both GB Ltd and Finley are paying recruitment commission to the
recruitment company, of which neither were aware.
GB Ltd had specified to the recruitment company that all potential candidates must have at least two years’
account management experience. However, GB Ltd has since discovered, after employing Finley, that he
does not have the required level of experience.
(a) Explain, with justification, two legal issues raised by commission payments being made by both
GB Ltd and Finley. (6)
(b) Explain, with justification, the legal effect of the recruitment company’s failure to ensure that Finley
had the required level of experience. (4)
M05/2020 M05: Insurance law 2
Copyright © 2020 The Chartered Insurance Institute. All rights reserved.Question 4 – Learning Outcome 5 (30 marks)
You are a claims handler for an insurer specialising in household insurance. One of the policyholders has
home insurance, which includes buildings and contents cover. When the insurance policy was incepted the
policyholder confirmed the property was their permanent residence.
The policyholder notifies you of a claim for water damage to the property and personal possessions. Whilst
investigating the claim, you discover the following:
• The policyholder rents out the property on short-term lets, during which they temporarily vacate the
property. However, the policyholder has never informed the insurer of this.
• The personal possessions are owned by a guest who had rented the property for the weekend.
• The policyholder has received a criminal conviction for burglary, although this conviction occurred after the
inception of the policy.
(a) Discuss the possible effects of the short-term lets on the policyholder’s claim for the property
damage. Refer to one statute in support of your discussion. (14)
(b) Explain, with justification, whether the claim for the personal possessions will be settled. (6)
(c) Discuss the effect on both the policy and the claim of the policyholder failing to inform the insurer
of the criminal conviction. (10)
Question 5 – Learning Outcome 6 (20 marks)
Olivia owns an office premises. The office is insured under a commercial combined insurance policy, which
states the following:
• ‘The burglar alarm must be maintained in full working order at all times and activated when the premises
are unattended.’
• ‘The insured must remove the safe keys from the premises when the premises are unattended.’
One evening, Olivia left the office and thought she had activated the burglar alarm. During the night a break
in occurred, but the alarm failed to work. Olivia believes that the burglar alarm may have been faulty.
The break in resulted in loss of cash from the safe in the office. The safe was opened using keys that had
been left in the office.
Olivia makes a claim for the loss of cash from the safe.
(a) Discuss the effect on both the policy and the claim, of the failure of the burglar alarm. Refer to
one statute in support of your discussion. (12)
(b) Explain, with justification, the effect on both the policy and the claim, of Olivia’s failure to remove
the safe keys from the office premises. (8)
Question 6 – Learning Outcome 7 (20 marks)
You are a claims handler for an insurer. A policyholder of the insurer is a farmer who has submitted a claim in
respect of the following losses caused by a lightning strike:
• Total loss of a tractor that caught fire when it was struck by lightning.
• Fire damage to crops grown to feed the farm animals.
• The cost of hiring a replacement tractor.
• The cost of purchasing replacement feed for the farm animals.
Due to administrative issues within the insurer, the agreed claim settlement was significantly delayed. This
resulted in additional tractor hire costs due to the excessively long period it took to settle the claim.
Consequently, the farmer has also claimed for this additional hire cost.
(a) Explain, with justification, the legal doctrine applicable to the claim in respect of the damage
caused by the tractor catching fire. Refer to one case in support of your explanation. (12)
(b) Discuss the farmer’s legal remedy for the delay in settling the claim. Refer to one statute in
support of your discussion. (8)
M05/2020 M05: Insurance law 3
Copyright © 2020 The Chartered Insurance Institute. All rights reserved.Question 7 – Learning Outcome 8 (20 marks)
You are a claims handler for an insurer. One of your insurer’s policyholders, Paul, owns a rare vintage motor
car.
The vintage car is insured under an agreed value insurance policy for the sum of £120,000. This agreed
value is based on an expert valuation carried out in 2015. The policy has been renewed annually, with no
subsequent change to the agreed value being advised to the insurer.
The vintage car was involved in a serious accident. Paul did not think the car could be properly repaired due
to its extensive damage and wanted the claim settled for the full £120,000. The insurer insisted that the car
was repaired.
Replacement parts were hard to source and as a result the replacement parts, which were deemed suitable
by the insurer, were not all vintage. An expert in valuing vintage cars, stated that in its repaired state the car
is now only worth £100,000. However, if the car had not been damaged its value would now be £150,000.
Paul wants to keep the car but argues that he should be given a cash payment of £20,000 to allow for the
loss of value.
Discuss the basis of indemnity and settlement for the vintage car. Refer to one relevant case in support
of your discussion. (20)
Question 8 – Learning Outcome 9 (20 marks)
You are a claims handler for an insurance company and are dealing with two insurance claims as follows:
Claim One
A claim by the next of kin following the death of an employee who was killed by a forklift truck during the
course of their employment. The forklift truck was being operated in a non-designated area by a temporary
member of staff, provided by an employment agency.
A settlement payment for the death of the employee of £750,000 has been made under the Employers’
Liability policy and a payment of £400,000 under a life policy.
Claim Two
A claim under a travel policy for bodily injury and damage to personal possessions. The claim occurred when
the policyholder was on holiday abroad and went on a trip organised by a local travel provider.
The insurer agreed the bodily injury claim but did not pay for the personal possessions, as they fell within the
policy excess of £100. The policyholder’s claim was settled for £15,000.
The insurer pursued the local travel provider and due to fluctuations in exchange rates received £18,000.
The local travel provider was concerned about reputational damage and provided the policyholder with a free
holiday worth £2,000.
(a) Explain, with justification, the rights of recovery that are available for the payments made in Claim
One above. Refer to one relevent case in support of your explanation. (10)
(b) Discuss the implications of the various types of payments made in Claim Two above. Refer to one
case in support of your discussion. (10)
M05/2020 M05: Insurance law 4
Copyright © 2020 The Chartered Insurance Institute. All rights reserved.Question 9 – Across more than one Learning Outcome (30 marks)
You are a claims handler for an insurer. You have received a claim from one of the insurer’s policyholders,
ABC Ltd, a bus company. One of ABC Ltd’s buses was involved in an incident which resulted in serious
injuries to two pedestrians. The whole incident was caught on closed-circuit television (CCTV) cameras and
the policyholder has accepted full liability.
Pedestrian A claimed for loss of earnings, for a six-month period, due to reduced mobility as a result of the
incident.
Pedestrian B claimed for loss of earnings .
Payments have been made to both pedestrians in full settlement of these claims.
Subsequently, you have established that:
• Pedestrian A had been playing golf with no apparent mobility issues, during the period for which they
claimed.
• Pedestrian B presented fake payslips in support of their claim.
• Pedestrian B has since moved overseas to another country.
You are now seeking to obtain recoveries from pedestrian A and pedetrian B.
(a) Explain, with justification, how the false information provided by pedestrians A and B differs in law.
Refer to one relevant case in support of your explanation. (10)
(b) Explain, with justification, two methods of recovery available to the insurer for the claims payment
paid to pedestrians A and B. Refer to one statute in support of your explanation. (12)
(c) Identify, with justification, the burden and standard of proof for each method of recovery you have
explained in (b) above. (8)
Question 10 – Across more than one Learning Outcome (30 marks)
You are a claims handler for an insurer. One of the insurer’s policyholders XYZ Ltd, is a wholesale firework
distributor. XYZ Ltd has a public liability insurance policy with an excess of £5,000.
XYZ Ltd have stored all its fireworks in the same industrial premises for over 20 years. Recently a small
residential housing estate has been built close by the industrial premises.
Richard who owns a property on the housing estate that is closest to the industrial premises, has made a
complaint to XYZ Ltd. The complaint related to the noise, dust and traffic caused by its company motor
vehicles.
Residents of the housing estate have also complained to XYZ Ltd about its vehicles regularly blocking
access to their homes.
A sub-contractor carried out maintenance work on the roof of the industrial premises. During the
maintenance work a fire broke out, resulting in a number of explosions. These explosions caused extensive
damage to several properties on the housing estate.
XYZ Ltd made a claim.
(a) Identify, with justification, two torts XYZ Ltd may have committed. (6)
(b) Explain, with justification, one defence available to XYZ Ltd in respect of one of the torts you have
identified in (a) above. Refer to one statute in support of your explanation. (4)
(c) Identify, with justification, two legal remedies that could be pursued by Richard. (4)
(d) Explain, with justification, the potential liability for XYZ Ltd with regards to the property damage
caused by the explosions. Refer to one relevent case in support of your explanation. (8)
(e) Explain, with justification, whether the insurer has any right of recovery against the sub-contractor. (8)
M05/2020 M05: Insurance law 5
Copyright © 2020 The Chartered Insurance Institute. All rights reserved.
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