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Insurance Law Question Paper

Insurance Law

Course:Bachelors Of Law

Institution: Jomo Kenyatta University Of Agriculture And Technology question papers

Exam Year:2012

JOMO KENYATTA UNIVERSITY OF AGRICULTURE AND TECHNOLOGY
UNIVERSITY EXAMINATIONS 2012/2013
YEAR III, SEMESTER I EXAMINATIONS FOR THE DEGREE OF BACHELORS OF LAWS
LSC 2306: INSURANCE LAW
DATE: AUGUST 2012
TIME 2 HOURS
INSTRUCTIONS: ANSWER QUESTION ONE AND ANY OTHER TWO QUESTIONS
QUESTION ONE
Ulysses was a 20 year old university student studying architecture. In October 2011, he went out with
his friends to make merry at the popular Maheppy discotheque in westlands, Nairobi. While on the
dance floor, a brawl broke out among the revelers, in the course of which Ulysses fell down hitting his
head on the floor. He was rushed to the hospital but was pronounced dead on arrival. A post mortem
examination revealed that he had a fracture on the skull associated with a heavy fall. At the time of this
incident, Maheppy investments Limited, the proprietors of the discotheque, had an insurance policy
with Urban lifestyle insurance company of Kenya (ULICOK) covering the insured against “any loss
associated with and occurring on the dance floor in the course of business”.
In the early December 2011, Ulysses’ parents sued Maheppy Investments Limited for compensation for
the death of their son. In order to avoid a negative publicity and secure the booming business usually
associated with the month of December, Maheppy Investments Limited swiftly engaged the claimants in
out-of- court negotiations and settlement of the claim. Maheppy Investments Limited then lodges a
claim with (ULICOK) for a refund of the kshs 1.5 million stating, inter alia, that it had secured a better
deal than would come out of the court process. ULICOK declines the request and wants to repudiate the
claim on the ground that Maheppy did not have any insurable interest in the death of Ulysses, that the
death did not occur “in the course of business” and lastly, that the act of Maheppy paying Ulysses’
parents the money out of court on their own had made their claim valid.
(a) Advise ULICOK on the position it has taken vis-a vis the claim by Maheppy. (15 marks)
(b) If the case lodged by Ulysses’ parents had proceeded to full determination by the court:
(i) Discuss the factors that the court would have considered in assessing the damages payable to the parents. (10 marks)
(ii) List down the various heads of damages under which the court would make an award in the case. (5 marks)
QUESTION TWO (20 MARKS)
“ I am satisfied that the intention of the Act ( Insurance (Motor Vehicles Third Party Risks, ) Act Cap. 405, laws of Kenya) was to provide protection to third parties who receive injury…I think it is the duty of this court to construe the Act in such a way as to suppress all maneuvers which tend to frustrate the spirit and policy of the Act”. (Underlined part added)
-Crabble, L.A., in New great Insurance Company of India Vs.Cross & another: 1966 EA 95
Discuss the provisions of the Act that seek to enforce its spirit and policy, as well as those that seem to negate its spirit and policy. (20 marks)
QUESTION THREE
(a) Regulatory mechanisms of insurance in Kenya may be justified on correcting certain situations that have characterized the insurance industry in Kenya, as well as securing the future of the industry. Identify the various provisions and measures of the regulation of the insurance business in Kenya, pointing out the goals they seek to achieve. (10 marks)
(b) Discuss the challenges that insurance companies face in Kenya today in the course of their business. (10 marks)
QUESTION FOUR
Meuledi bought a car for her personal use on Friday 16th March 2012 from a motor bazaar along Langata road in Nairobi. At the yard, a young gentleman, Martin approached her and offered to secure her a comprehensive insurance cover with Wanwad Insurance Company of Kenya (WICK), which he said he was an agent of. As it was in the afternoon (about 3.30 p.m), and eager to drive the car over the weekend, meuledi paid Martin Kshs. 5,000/= being the equivalent of one month’s premium. He issued her with a hand written note acknowledging the receipt of the money, promising to get her an official receipt the following Monday. On Monday, martin took an official receipt to Meuledi at her work place, together with a letter from WICK requesting her to take the car for valuation at its appointed garage within seven days.He also gave her a Proposal form to fill out, but she requested Martin to fill it out for her as she was rather busy with work. She gave martin all the information he needed and information he needed and informed him that she was considering giving the car to her son Lonzy to be driving for his classes at kerren University. Martin had ignored this information while filling out the Proposal Form. She took the car for valuation on the 24th March 2012.
On the 16th April 2012 at 8.30 p.m., as Lonzy was driving the car home from an evening class at the university, he was involved in a road traffic accident with a matatu ferrying passengers home. The police blamed Lonzy for causing the accident. He was charged in court with and convicted of the offences of careless driving and driving while under the influence of alcohol.
Meuledi lodged a claim with WICK for repairs to her car. WICK repudiates the claim on the following grounds:
(i) Meuledi had not disclosed to it that the car would at times be driven by Lonzy
(ii) There was no cover at the time of the accident
(iii) The loss was self inflicted as Lonzy was driving the car while drunk.
Meuledi is considering going to court against WICK, an has approached you for a legal opinion on her chances of success against WICK. Give an exhaustive legal opinion supported by authorities, on the merits or otherwise of the grounds on which WICK has repudiated the claim. (20 marks)
QUESTION FIVE
(a) Explain the difference between
i. Indemnity and non-indemnity contracts of insurance
ii. Fault based and non-fault based schemes of insurance (10 marks)
(b) Write short notes on the following:
i. The basis of contact clause
ii. Knock for knock agreement (10 marks)

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