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    Paper Details


    question 1


    ABC Plc, an insurer, agreed to provide property insurance for a policy holder at an annual premium of 300 pounds.The policy accepted ABC Plc’s terms and the policy was incepted on the 1st of December 2016. The premium payment was due by the 1st of January 2017. Due to an administrative error, ABC plc incorrectly calculated the annual premium which should have been 415 pounds. On the 15th December 2016, an insured event occurred at the policy holder’s property. The policyholder notifieda claim to ABC plc on the same date 

    (a) Explain briefly two reasons


    (a) Explain briefly two reasons why the policy holder has no legal obligation to pay the higher premium.

    (b) Discuss the extent to which it is relevant to the claim that the premium has yet to be paid.

    700 words for both questions




    Question 2.


    You are an underwriter for JKL plc, an insurer. An insurance broker holds a delegated authority scheme was JKL plc. This delegated authority scheme allows the insurance broker to place on cover motor cars that are in specified car groups. The insurance broker places on cover a motorcar in a car group which is outside the delegated authority. Explain, with justification, the extent to which JKL plc is legally bound by the insurance broker’s decision to place the motorcar on cover. (700 words)



    Should be streamlined based on English law not American law




    Prepare 2 different word documents for each question


Subject Law and governance Pages 4 Style APA


Insurance: Question One

Insurance is one of the most comprehensive branches of English law. It mainly dictates the acceptable relationship and conduct that exists between an insurer and an insured. For the purpose of this paper, the concepts of policy and premium are vital. An insurance policy denotes a document that details the terms and conditions of an insurance contract. Alternatively, the insurance premium is the sum of money that one must pay for a particular insurance policy.

Legal Obligation

Briefly, ABC Plc is an insurance company; it entered into a legal contract with a policy holder to cover a particular property at a year 300-pound premium. However, it was later discovered that the sum had been miscalculated and the policy holder is, in fact, required to pay an annual premium of 415 pounds. Naturally, ABC Plc will require the policy holder to pay the additional sum of 115 pounds. Regardless, there are variable reasons why the policy holder has no legal obligation to pay the higher premium.

Firstly, the policy holder and ABC Plc have already entered into a legally binding contract. One of the most imperative elements of a contract is compensation (Khorooshi et al., 2017). In this particular case, the amount stipulated in the insurance contract under compensation is 300 pounds. Therefore, the policy holder is only legally bound by this contract, and hence, the sum that is stipulated in this contract. He/she is not legally obligated to pay the additional sum of money.

Secondly, the duration for which the coverage lasts has not yet ended. This means that the initial agreement that the insurer and the insured entered into legally covers a period of one year. Therefore, the policy holder is only legally obligated to pay an insurance premium of 300 pounds to cover the entire years. The insurer has no legal right to demand more money from the policy holder before this period ends. As a result, the policy holder has no legal obligation to pay the full 415 pounds annual premium instead of the miscalculated 300 pounds annual premium since the insurance policy remains valid for a given duration of time.

Relevance of the Claim

Succinctly, the insurance policy was formulated on 1st December 2016 with the agreement that the premium should be paid by 1st January 2017. However, an insured incident transpired on 15th December 2016, after which the insurance company was notified. It is considerably relevant to the claim that the policy holder is yet to pay the premium.

In definition, an insurance premium denotes the sum of money that one pays to acquire and sustain an insurance policy. Importantly, the insurance company views the insurance premium as income; it is a representation of a liability whereby the insurer has a legal mandate to provide coverage for claims that the policy holder makes against the policy (Burling, & Lazarus, 2012). In this particular context, while the policy holder made a claim for coverage against the policy, he was yet to pay the required premium to cover this claim. This makes it relevant to the claim that the policy holder was yet to pay the premium to impose a liability on ABC Plc.

The purpose of the premium is to impose a liability on the insurer. Liability refers to the state of having a legal responsibility for something. Through the premium, ABC Plc would be legally obligated to cover any claims that the policy holder makes against the insurance policy. Currently, however, the insurance contract is not yet complete since there has been no compensation made by the policy holder to ABC Plc. A complete insurance contract or policy is evidenced by the initial payment of the first annual premium to the insurance company. The claim that the policy holder has made to the insurance company is not entirely valid and can therefore, be disputed in a court of law.

Conclusively, insurance law is considerably intricate. There are several issues that may emerge in various circumstances in the relationship between the insurer and the insured. Some of the established facts, however, are that the insured must pay premium for the insurer to cover any claims against the policy.



Burling, J., & Lazarus, K. (2012). Research Handbook on International Insurance Law and Regulation. Cheltenham: Edward Elgar Pub.

Khorooshi, A., Rahimi, H., Hamed, A. G., & Maleki, J. (2017). Basis of Contract Clause in the UK and the Necessity for Reforming Insurance Law in Iran. J. Pol. & L., 10, 156.


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