Policy validity
You are a claims handler for an insurer. One of the insurer’s policyholders, has a motor policy. The policyholder, Philip has reported to you that his vehicle, which he was driving, was involved in a road traffic collision with a cyclist. At the scene of the collision Philip apologises to the cyclist for his actions. The police investigated the incident and established that Philip’s vehicle had defective brakes.
Philip’s motor policy wording states the following:
‘The policyholder must not admit liability without prior written consent of the insurer. The insurer will not be liable for any losses arising out of the policyholder’s failure to comply with this clause’.
‘Vehicles must be maintained in a roadworthy condition at all times’.
You have received claims for the injury to the cyclist and the damage to Philip’s vehicle.
(a)Explain, with justification, the likely effect of the apology given by Philip on the validity of the policy and the insurer’s liability for the claim by the cyclist.
(b)Explain, with justification, the effect of the defective brakes on the validity of the policy and the insurer’s liability for Philip claim for vehicle damage claim for vehicle damage.
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