> Contractually, this could then prove an interesting
> test case. Insurer agrees to provide cover on a vehicle of
> specified value, then refuses to pay out the agreed value.
Been tried. Failed. The proposal form, where you enter the details of the car, amounts to a description of the risk and assoicated factors. The value is used as a determining factor in that if it was too low or too high, the insurer would take a closer look at the risk.
You will find within the policy document, which is the contract, it talks about what value will be paid for the car, and it is not related to the proposal description.
Another point is the way they use fair market value. They do NOT consider what you would have to pay to get another vehicle like this, they consider what you would have been able to sell your vehicle for. This is frequently not the same. Not by a long shot.
What a second hand car dealer would pay to buy your car is not very close to what he would sell that car to you for. If you decide to fight the matter, then you would need to resort to something like the Trader over a period of a few weeks. Take details of every car comparable to yours and show a reasonable interpretation of what you would have been able to sell yours for.
Interestingly, even on an "Agreed Value" policy it is not straight forward. This is an agreement by both parties that this is what the car is worth at the beginning of the insurance cover. It does not neccessarily mean that this sum will be paid in the even of a loss. Depreciation and market conditions would both alter that amount as would many other factors.
M.
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When was the test case tried? Contract law and interpretation of contract law has changed within the UK over recent years. The concept of an "unfair contract" has changed the ground rules for all parties concerned. If the policy document is produced after the client has agreed to purchase insurance and paid for cover, it is not a contract, it is the insurer's interpretation of the contract. What document does the client sign? Proposal or policy? It would appear that only in the wonderful world of insurance does the full documentation appear after the contract has been signed and money handed over.
If the purchase of insurance was viewed as a purely contractual issue, the client would state the value to be insured and the terms of cover, various insurers would be invited to tender to provide cover to match the client's requirements. The client would accept the tender that is closest to meeting these requirements. At present, most clients do not understand what they are buying; of course, this is in the interests of the insurers.
If clients had enough firepower, they could dictate to the insurers what the cover should be (with no small print disclaimers), what the payout would be in the event of a claim, and (to a certain extent) how much the product should cost.
The whip hand is with the insurers (at present), primarily because they hide behind jargon and disclaimers. Most clients are at a loss to understand policy documentation (understandably) although this in itself can be interpreted as an unfair contract.
M
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> When was the test case tried? Contract law and interpretation
> of contract law has changed within the UK over recent years.
That is perhaps a very important point. Whilst I don't believe it applies here, there have been many substantial changes of which I am aware of, and therefore without doubt an absolute ton of substantial changes of which I am not aware.
To randomly pick up some of your other points......
All brokers/agents have copies of all policies which they sell and you are able to see this before you have over your money or sign anything. Mind you, whether that particular broker/agent knows he's got them or has any idea where to find them is another point.
> If the policy document is
> produced after the client has agreed to purchase insurance
> and paid for cover, it is not a contract, it is the insurer's
> interpretation of the contract.
That depends on what you mean by "produced". If it were available beforehand, which it is (even with a time delay) then the point is not relevant. It is also mentioned on the proposal as forming part of the contract and that it is available to you. It also shows this on your schedule and typically also on both the certificate of insurance and the temporary cover note. If the document changed materially or you were denied sight of it, then the point would be different.
Even were it simply the insurer's interpretation rather than the contract itself, this would not be relevant unless you could show that you reaosnably held another interpretation. In the case of vehicle valuation you would fail, since this is pretty much a constant, and certainly the norm, throughout the industry.
Even then, the most that would happen is that the contract would be null & void with monies returned. It would be very tough to get compensation beyond the premium.
> What document does the client sign?
Not relevant. A contract does not depend on signature, this simply makes it easier to prove the particular agreement which was used.
M.
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Mark wrote ">All brokers/agents have copies of all policies which they sell and you are able to see this before you have over your money or sign anything. Mind you, whether that particular broker/agent knows he's got them or has any idea where to find them is another point.<"
If you buy "over the phone" the contract is in place and fully effective, no policies are available at the point of sale, the contract agreement is based on a phone conversation (taped by the insurer and the client- hopefully), client gives credit card number, money changes hands. In contractual terms, the policy details are irrelevant (they were not available at the point of sale).
If the policy/contract is purchased over the counter at a broker, and the relevant documentation is not produced by the broker, then this could be construed as mis-selling. 15 years ago brokers/salesmen could sell worthless pension plans and endowment policies with very little in the way of supporting documentation and pocket the commission, Today the position is very different, if the correct supporting documentation and information as not available at (or prior to) the point of sale, then an allegation of mis-selling may follow (note that the product may still be worthless!)
">Even were it simply the insurer's interpretation rather than the contract itself, this would not be relevant unless you could show that you reaosnably held another interpretation. In the case of vehicle valuation you would fail, since this is pretty much a constant, and certainly the norm, throughout the industry.<"
And that reasonable intrepretation should be the proposal form, and nothing but the proposal form, because that's what the client signs. The unintelligible goobledegook within the policy has no place as part of a contract with any average person, again we are in the position of an "unfair contract", how can it be fair if it is not understandable? The value of the car should be agreed at the start of the contract with an agreed % reduction throughout the contract period (alternatively, the use of an agreed independant source to determine value over the contract period), note the key word "agreed", not "in the opinion of the insurer". This is unlikely to occur until either:
i) A test case
ii) Client's gain more leverage
Both the above apply to the recent debacle involving Equitable Life, the clients had sufficient leverage and funding to force the issue in court, the judge(s) found in favour of the clients.
">Even then, the most that would happen is that the contract would be null & void with monies returned. It would be very tough to get compensation beyond the premium.<"
Who would declare the policy/contract null and void? If the contract terms are that the insurer can declare the contract null and void without good reason (and these reasons should be detailed in the contract document, not just covered by "in the opinion of...") then this is clearly an unfair contract, because it allows one party to "walk away" from their obligations. In a test case, the judge would decide what is a "fair contract", if he finds in favour of the client, the judgement would ensure that the insurer met their liabilities in full. Unlikely that any one person would take on an insurer, but a group could (see comments regarding Equitable Life above).
">Not relevant. A contract does not depend on signature, this simply makes it easier to prove the particular agreement which was used.<" Not certain which country you are in at the moment ;-), but in the UK most meaningful contracts require a "signature", which could be electronically generated, for larger "contract" sums involving individuals eg house purchase, a "real" signature is required. Verbal contracts have a legal standing, but are (almost) invariably backed-up by a tape of the conversation.
The reality is, if your annual premium is £500, you are small fry; if the insurer is offering a settlement £2000 below your requirement, the insurer will not be concerned if you indicate that you might put the policy/contract out for tender at the next renewal. However, if your annual premium (contract value) is £500 000, the insurer would be very concerned if you threaten to go out tender at the next renewal (expiry of contract) should the insurer not meet your wishes.
M
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Message for Mark B, I must now retire (I have to battle with the M25 tomorrow early am,) all my energy reserves have now been used creating text about insurers (?). Seagull messages are much easier!
CU
M
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>(I have to battle with the M25 tomorrow early am,)
Whilst I am now going to a beach bar in Copacabana for a few, and tomorrow morning I will be playing golf just outside Rio de Janeiro.
When you are in the M25 tomorrow morning, please think of me and the huge grin on my face !
Later,
M.
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Ok, you win by weight of words.
However, I cannot resist one point, NO contract requires a signature. A signature is simply convenient proof that a contract is in place, and what are the details of that contract.
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Mark wrote: ">A signature is simply convenient proof that a contract is in place, and what are the details of that contract.<"
Exactly, the details of the contract agreed by both parties.
In a nutshell. insurance policies (contracts) are written by insurers for the benefit of insurers, if the premium (contract value) was large enough, the client could write a policy (contract) to meet his requirements in the knowledge that an insurer would provide cover ("win" the contract), if only to boost gross income. I believe that the largest fleet owners (Post Office? etc) don't purchase insurance
but have a fund available to cover any claims (this info is not up to date so may be incorrect).
CU
M
(Returning to seagull activities)
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