Insurance Law in the US

Introduction 

Insurance is guided by the law to ensure that case of malpractice and fraud are minimized. Insurers are also guided by laws and rules to ensure that their rights and those of the clients are protected in cases where they might be deemed liable for certain situations and decisions. Similar to any career, insurance is not perfect. There are cases where insurers or the insured put themselves in situations where they are vulnerable to legal issues due to their decisions or actions. This paper will analyze several situations where insurers are faced with issues where they are vulnerable to legal actions by their clients. Considering the insurance law in the U.S., the paper shows different scenarios and actual court cases that led to landmark rulings about insurance. 

Question 1: Law of Tort 

Identify, with justification, three torts that may have been committed by the uninvited people. 

The case presented reflects tort offenses. One of the torts is the property torts, specifically, trespass to land. The justification of this type of tort is the intentional act of entering into another individual’s land with no lawful excuse. From the case, it is apparent that the accused individuals have entered into Luke’s land several times, which demonstrates that the act is intentional and motivated by their gain. The act of unlawful entry into someone’s land is said to be actionable per se. What this refers to is that Luke can sue the people trespassing his land. 

Negligence is another form of tort that emerges in the case. Usually, negligence occurs when one fails to exercise care even when it is clear that the individual is reasonable enough to know the consequences and effects of his/her actions to the affected (Michell, 2009). The accused individuals, for instance, should have known that they were trespassing into Luke’s land. Apart from just trespassing, they damaged and stole crops for economic benefits. The acts cause emotional pain and economic loss to Luke. The accused should have known that their actions were causing great pain to Luke and should have exercised caution. They also should have known that by trespassing, they were damaging crops. Therefore, incidences of negligence are evident in the case. 

Finally, the case represents an intentional tort. While an individual can be excused for trespassing one’s, the individuals in questions had formed a habit of entering into Luke’s land. To complicate matters further, they intentionally damaged and took crops for their selfish gain. In this case, the tortfeasors cannot be excused for their actions because they were intentional and out to cause great emotional pain. 

Explain briefly two appropriate remedies that may be available to Luke. 

Luke can seek legal redress and hope for the legal remedies for torts, which is also know as damages. Normally, the damages are calculated based on the economic and emotional pain suffered by the victim, in this case, Luke. The compensation can also include an additional punitive damage as the court will determine. The court might decide that on the top of the losses incurred by the victim, there is also a need to punish the tortfeasors further as a deterrent for bad behavior. Luke deserves compensation for damaged crops, stolen crops, labor costs, and the distress caused. The pain and suffering damages are difficult to calculate, but it is necessary that they are awarded to Luke. 

Luke can also sue for restitutionary damages. The term refers to the act of taking the gains from the tortfeasors and giving them to the victims. At times, restitutionary damages are considered because the gains acquired by the wrongdoer might exceed loss suffered by the victim (Pottier & Xu, 2017). In Luke’s case, it is possible that the wrongdoers obtained more economic benefits by selling the crops compared to the amount that was used to grow them. So, the court must determine the market price of such goods to determine the damages the accused should be forced to pay. However, it is still imperative for the court to take into account other losses that suffered by the claimant that did not result in any gain for the wrongdoer. In Luke ‘s case, wrongdoers did not gain from the damaged crops and the emotional distress suffered by the victim. These losses should be compensated and the wrongdoers suffer the consequences. 

Question 2: Insurance Premiums 

Explain briefly two reasons why the policyholder has no legal obligation to pay the higher annual premium. 

The first reason why the policyholder has no legal obligation to pay higher annual premium is because of the existing contract. In the formation of a contract, the insurer makes an offer to a potential policyholder. The policyholder looks at the terms and conditions, including the premium to be paid, and makes an informed choice. The agreement to pay the premium demonstrates policyholder’s consideration and the willingness to activate the policy. At this point, an insurance contract has already been formed. Any major changes might lead to the termination or suspension of the initial contract. In the case of ABC plc, the policyholder does not have any legal obligation to pay higher premiums. This is because any changes in premiums will fundamentally affect the insurance policy contract. The insurer should have exercised caution to ensure that everything in the contract was accurate before it was presented and signed by the client. 

The second reason is that of consensus ad idem, which means, that there was a meeting of the minds between the insurer and the policyholder. The meeting of the minds demonstrates the discussions taking place up to the point of decision-making. It is highly likely that the policyholder accepted the offer based on the initial agreed upon offer. It is the responsibility of the insurer to demonstrate their competence, skills, and caution when making offers (Pottier & Xu, 2017). The rationale is that undoing some major mistakes is costly and can lead to termination of a contract. Therefore, the policyholder accepted the consideration because the original offer was favorable to them. Legally, they cannot be forced to pay higher premium because that is not what they signed for. 

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

The insurer can make some claims concerning the insurance policy in questions. The first claim focuses on when a risk begins to run. Looking at the policy contract, the policyholder indicated that he was to pay the first premium about a month (1 st January, 2017) after the inception of the policy. What this basically means is that on 1 st of December, a contract came into existence. However, the main question is whether the contract was up and running. The answer to this question lies in the understanding of the law. An insurance contract might come into existence, but not run immediately. The only time that the contract begins to run is when the policyholder begins to perform his/her obligation, which involves the payment of the agreed premiums ( Van, 1998) . In the case in question, it is apparent that the policyholder had not paid any premium at the time of the insured loss. 

The other argument is based on the communication between the policyholder and the insurer about the method of calculating the premium. In fact, if the insurer clarifies to the policyholder how the premium is calculated, then that is all that matters. Administrative errors might come leading to a mistake of the premium. However, if the mistake is later identified, like in the case involving ABC plc, then it is expected that the client should understand. In this case, the insurer can argue that the insured has not remitted any premium, and if they have done so, it is not a reflection of what was agreed upon in the method for calculation. 

Questions 3: Agency Law 

Explain, with justification, the extent to which JKL plc is legally bound by the insurance broker's decision to place the motor car on cover. 

An agent is considered to be an intermediary between the insurer (principle) and the third party (client). As an intermediary, the agent (broker) is a representative of the insurer. The implication of this kind of representation is that what transpires during the interaction between the broker and the agent affects the principle directly. Whether the insurer is disclosed or undisclosed at the time of making a contract with a third party is immaterial. The expectation is that once the client is satisfied that the broker represents a particular principle then any deals reached will have an effect on the principle. 

In the provided case, the broker made a deal, which was legal, but outside of his mandate. One of the responsibilities of brokers is that they must act in good faith and obey the principle. Clearly, the broker defies the principle by placing the motorcar on cover. This is a breach of trust and good faith, which can attract punishment from the principle. However, it is the responsibility of the principle to ensure that the brokers are of integrity and trustworthy. The client does not have to be concerned about such issues, because they will be compensated in case of any loses. 

According to the agency law, if the agent (broker) uses any fraudulent means to influence client’s decisions, the principle is still liable. Therefore, in the presented case, the principle is bound by the decision (fraudulent or not) of the broker. However, in this case, the broker is still liable, but not directly to the client. It is assumed that while the client is guided by the broker into accepting an offer, the client deals directly with the principle. In other words, even if the client agrees to sign a contract in the physical absence of the principle, that does not exonerate them (principles) from their obligations and responsibilities. In this case, the agent ought to take responsibility for misleading the client. The principle ought to punish him for disobeying instructions given and failing to obey. 

There are circumstances under which the client can take responsibility for their actions. For instance, in the event that the client makes any form of contact to the principle indicating the intension to deal directly with broker, then it is presumed that the client is aware of the consequences (Pandey & Rao, 2013). Any payment, by default, should be made directly to the principle. Actually, the main responsibility of the broker is to bring the principle and the client together. After that, the broker cannot be affected by anything that transpires in the interaction between the principle and the client. 

In the case under investigation, it is apparent that there was no contact between the principle and the third party (client). From the explanation given, the principle had delegated responsibility to cover motorcars, though, there was specification. From that perspective, it can be assumed that the principle knew the broker, trusted his skills and competency in making deals, and believed that the principle was a professional. In a nutshell, the JKL plc should take responsibility for the deal made between the broker and the third party. The client should not suffer because of the broker’s actions. 

Question 4: Insurance Principles 

a) Explain, with justification, whether an insurance policy is likely to be valid in Matthew's name for each of the following: 

(i) His uncle's sports car 

When making the determination of whether the insurance policy will be valid or not, the issue of insurable interest arises. The insurable interest focuses on the policyholders derived financial gains or any other kind of benefits as long as the insured object remains in existence (Ganglmair, 2017). When the client has some insurable interest, they are motivated to avoid any form of damage to the insured object. For instance, the client will ensure that the insured vehicle is serviced regularly and repaired to maintain it in good condition. Looking at Matthew’s case, it is difficult to tell whether he has any insurable interest in the vehicle. His explanation is that he needs the uncle’s vehicle to use in the summer. Firstly, it is vital to determine whether the vehicle is being used by another person apart from him. Assuming that the uncle is using the vehicle before summer, is he aware that it has been insured? Does he know the terms? These questions are fundamental because they will have an effect on the insurance cover. Is it possible that he can borrow or lent a vehicle from another source? The answer is yes. There is a high possibility that if the uncle’s car is not available, Matthew can look for other alternatives. The fact that he does not own the car and has other alternative sources shows that Matthew has little or no insurable interest on the vehicle. Therefore, there is a high likelihood that he will not be allowed to insure the vehicle. 

(ii) His daughter's bracelet 

Again, the question is whether Matthew has any insurable interest on the bracelet. He might like the bracelet, but is he in direct care of it? The bracelet is in control of his daughter who has just turned 21. Thus, the person who is supposed to be insurance holder is the daughter. However, if the daughter is involved in the insurance policy contract agreement, then this could lead to a valid insurance cover. The reason why the daughter needs to be involved is so that she understands the terms and conditions from the insurer. For instance, she might be advised on security factors that she ought to take into consideration to protect the bracelet. It appears that the daughter is not being involved in the process of insuring the bracelet, which makes the matter more complex for the insurer. The fact that Matthew has little or no insurable interest on the bracelet explains why the insurance will not be valid. 

(iii) The life of the Managing Director 

Two issues are of interest in this case. The first concerns the consent of the person to be insured and the second is about the insurable interest to buy the life insurance. Looking at the issue of consent, it is not clear whether the managing director has been informed. Assuming that the managing director is unaware of the plan to insure his life, then the whole process is invalid. The justification is that most insurer will demand for medical checkup for the insured persons. This helps the insurer to know the age of the insured, the healthcare risks, and the current state of health. From such information, the insurer can be able to make informed decisions about the duration of the cover and the premiums. Going by this information, Matthew cannot be allowed to take the life insurance for his managing director. 

The second point is on insurable interest. Matthew owns a business, which demonstrates his interests in insuring his managing director. The health of the managing director is vital for the success of his (Matthew’s) business. However, even with the insurable interest evidence, but there no consent, it is highly unlikely that FD plc will give the life cover. In such cases, especially where the person being insured is not a minor, consent is mandatory. 

(iv) His father's house 

Matthew is said to be the sole beneficiary of his father’s house. What that simply means is that Matthew has insurable interest on the house. He can take a policy cover for the house. However, it will be prudent to inform the current occupant of the house (his father) of his decision. There are certain terms and conditions in the agreement that occupants need to know to safeguard the property. Nevertheless, the will is a valid evidence and demonstrates that Matthew can own the house in future. He has insurable interest in the property, which will make sure that he takes care of the house. 

Discuss FD plc's potential legal remedies for each of the two non-disclosures in relation to Matthew's property. 

The insurer only gets to know about the property being insured through the information provided by the client. The insured has the duty to full disclosure of all the vital information that has a direct effect on the proposed insurance policy. Matthew did not provide crucial information, though, this might not have been deliberate. Nevertheless, FD plc was to make decision based on the information given. Before any compensation can be made, it is imperative to establish whether the party has suffered any losses as a result of non-disclosure. From the case provided, the insurer has been making losses (instead of Matthew paying an annual premium of £700, he was paying £500), meaning that he has the right to claim compensation. The potential remedies for each of the non-disclosures include the need to make the contract voidable and to pay for any financial damages to the insurer. A voidable contract is binding, but requires that both parties agree on a number of issues before the performance. Instead of FD plc terminating the contract, the goal should be to renegotiate the contract and correct the anomalies by having Matthew disclose all the vital details. After the renegotiation, Matthew should agree to top up the difference between the actual annual premium and what he has been paying. This will restore the insurer in its deserved financial position and enable FD plc to continue to provide cover. In the case of Rozanes vs Bowen (1928), the judge (Scrutton) ruled that the underwriter does not have sufficient information about the goods to be insured. The underwriter relies on the information disclosed to make an informed choice. As a result, the insured is expected to act in good faith by disclosing all the vital information concerning the property being covered. Therefore, it appears that Matthew acted in bad faith, leading to financial losses for the insurer. 

Question 5 

a) Explain the validity of Laura's claim for her personal possessions, due to the ground floor window being unsecured. Refer to one relevant case in support of your explanation. 

Considering the case of Laura, her claim would be voided by the insurance company since she breached her contract. Based on her agreement with the insurance company, she would always ensure that all the doors and windows were locked when she left the house. Therefore, her claim for the loss of the private possessions would be invalid on the basis that she left one of her windows open, facilitating the robbery. 

(b) Explain, with justification, the effect on the validity of Laura's policy due to her shoplifting. Refer to one relevant case in support of your explanation 

In addition, her claims for insurance were invalid based on the fact that she had stolen property. Insurance claims are deemed invalid when a crime is involved. Insurers are not liable when stolen goods are involved. When someone has stolen goods, he or she cannot claim insurable interest, and without this, there can be no claim for recovery of loss. An example of a case involving insurable interest was evident in hadwick v. Gilbraltar General Insurance Co. the court ruled that the insurance claim of the plaintiff was lost once the true ownership of her vehicle was discovered. The fact that Laura failed to return the goods or turn them over to the police meant that she was guilty of a crime, and hence her claim for the insurance was not credible and valid. 

(c) Explain the validity of the claim for Carl's furniture. Refer to one relevant case in support of your explanation . 

On the other hand, Carl’s claims were still invalid since he was covered by the insurance claim that had the name of both plaintiffs. He did not have any liability since it was the reckless actions of the tenant that led to the loss of his property. In addition, his property was not implicated in any crime, considering the fact that some of Laura’s property was a result of shoplifting. However, since the policy was registered using the names of both Carl and Laura, he loses all claim to the insurance since the liability of Laura also affected his claim. 

Question 6: Insurance policies 

Describe, with justification, the extent of cover the policy would likely provide for the emergency repair to stop the flood. 

Greg acted in a way that a reasonable person would to prevent further damage. In insurance law, there are obvious things that the insurer should know and the insured does not need to keep always disclose. In the case provided, Greg called emergency plumber and plasterer with an aim of stopping water from making more damages. Had Greg no acted swiftly, he would have incurred major losses, which could also have affected the insurer. The cover should be able to reimburse money used by Greg to deal with the emergency. Another reason why the insurer should cover for emergency repair is because such emergencies are sometimes unavoidable, like in the case presented. While it was caused by the wear and tear factors, which were not covered in the agreement, that does not mean Greg is not entitled to compensation for the amount he used. What the insurer should be concerned with is whether the flooding was a result of negligence. Clearly, the efforts to call repairers and going to an extent of paying them for offering emergency services shows that there was no negligence on the part of Greg. Therefore, the company should be able to compensate Greg. 

Explain, with justification, the extent of cover the policy could provide for the damage resulting from the original cause of the flood. 

To determine whether the company should or should not pay, it is vital to look at the terms and conditions. Greg’s cover indicated that he would be compensated should the losses arise from floods. The insurer did not say that if the floods should occur because of wear and tear, they will not pay. Wear and tear are inevitable. In fact, wear and tear could be the main cause of pipe leaks that eventually leads to flooding. That might explain why the insurer did not want to include wear and tear in the insurance cover. The insurer should be able to compensate the insured for the damages causes by the floods. The cause of damage is floods, which is covered by the insurance policy. 

Identify, with justification, the information you would require from Greg to allow you to authorize settlement of the claim. 

The first step would be to ascertain that the insurance policy covers floods. This information should be available in the insurance agreement. Greg should also provide information about the damage to the properties, explaining the extent of the damage. The information plays a vital role in determining the amount that should be paid to Greg for compensation purposes. It is also important to find out whether Greg has any receipts for the furniture, electronics, and any other properties that might have been damaged. This helps to know the actual value of the products, which helps to determine the amount to be paid as damages. Physical evidence such as photos of floods and can also help. With all the information, it will be possible to prepare and authorize a settlement claim. 

Question 7 

(a) Explain the basis of indemnity for each of the four claim elements included in the bullet points above. 

Building losses have the biggest potential for disputes. This is especially common when there are total loses however, before awarding a client the full payout, the insurance has a responsibility to determine if there are partial losses using the indemnity settlement. An insurance company has to determine if there are pre damage and consider the condition and age of the building before validating a claim. In the case of a minor fire, there will be damage to building elements such as electrical, structures, and decorations. In addition, different parts of the building have different life span expectations, meaning that the indemnity is calculated differently ( Bianchi, Peat, & Windsor, 2015) . Structures such as the roof and the floor are considered separately due to their rate of degradation. When the damage is extensive meaning that the cost of repairs might exceed the diminution in the market, the case should not be overlooked. If there is a clear intention to renovate the building and the DMV is unrealistic, then the indemnity required for repairs in realistic. In the case of the building in learning outcome 6, the indemnity was calculated according to the vulnerability of the house to destruction and the age of the elements. For example, the cost of the television was based on the fact that it was 7 years old, and the TV technology has changed significantly over time. However, jeweler had a relatively stable value over time. Based on such considerations, the value of the elements destroyed in the fire varied significantly. 

(b) Calculate, showing all your workings , the payment you would make to Mohid to settle the claim, taking 

average into account 

The insurers used the depreciated replacement costs to determine the value of the destroyed elements since the house was occupied during the period of the fie accident. It normalizes costs by reducing values, taking into account the depreciation. It reflects the devaluation of an element. The approach is used to provide a fair valuation for an asset, especially when it is being used and depreciates gradually. Since the property market fluctuates, the calculation for the indemnity also changes over time. Therefore, the insurer cannot exaggerate the value of the asset since the current market conditions are considered. Based on this fact, the discrepancy between the independent valuers and the insurance company might arise due to consideration of the current real estate market conditions and not on the initial value of the house. 

Question 8 

a) Discuss the implications of RTS Ltd holding two insurance policies. Refer to one relevant case in support of your discussion. 

Some companies take 2 insurance policies to cover the same risk. In such cases, it is important for companies to be aware of the consequences of double insurance. Since there are liabilities based on the rules of insurance, both insurers and clients should know how they are vulnerable when they are involved in double insurance. 

In the case involving RTS ltd, the decision to have a double insurance has to consider the clauses which were agreed upon in the contract. Based on the fact that the insurer had a rateable clause, it means that the other insurer was liable to share the liability according to the terms of the contract. 

In order to understand the consequences of double insurance, it is important to define the term. Double insurance is a situation where one party has two or more insurers for the same subject matter against a single risk for a defined period of time. There is no double insurance when one company provides the policy. In addition, if the subject matter is not the same, a client cannot have double insurance. When the risk is different, there cannot be double insurance. Finally, the period of time must be the same for a policy to qualify as double insured. The mentioned conditions have to be met for double insurance to be valid. 

There are several clauses in double insurance cases. The general rule is that loss caused by the risk means that the client can recover the loss from the insurer of choice. The insurer is then entitled to claim the indemnity from the coinsurer. The most common clauses include notification clauses and rateable proportion clauses. The first clauses state that the insured party should give a written notification to the insurer about the existence of a coinsurer. Failure to do so renders an insurance policy invalid. In the second type of clauses, the insured is prevented from claiming the full loss from one insure. Instead, the insurer is provided with an allowance to cater for the rateable portion only in cases of a loss. There are also excess and escape clauses where the latter can turn a policy to if the loss exceeds the cover provided by one insurer. There are cases where the cover is not sufficient enough to cover in full the claim of an asset. On the other hand, the latter relieves the insurer from any responsibility when there is a case of double insurance. There are difficulties when these clauses are two, meaning that both insurers have inserted their own clauses on the policies, meaning that they both need to be interpreted during payouts. The combination of different clauses has proven to be difficult as is evident in the case involving National Farmers Union Mutual Insurance Society Ltd v HSBC Insurance (UK) Ltd  [2010]. The case involved two insurers who were covering a fire case. The fire occurred 17 days after the sale was completed. Bothe the seller and the buyer took policies independently, meaning that the asset was insured twice. The policy by HSBC had an excess clause while stating the HBSC will not pay an insurance claim covered by bother company unless it exceeds the covered amount. On the other hand, the policy taken under NFU had a rateable clause in the case where another insurance was covering the same case. The judge ruled that the HSBC cover operated as an excess for the NFU policy. Therefore, if the excess clause was not triggered, the HBSC cover did not provide any cover for the company. Therefore, NFU was liable for the loss in full. Therefore, the case shows the importance of understanding the implications of double insurance before entering into a contract with an individual to or company. They have to understand the liability issues involved in such arrangements to avoid unexpected losses. 

(b) Discuss the implications if the insurance policy with DDF plc has a non-contribution clause rather than a 

rateable proportion clause 

In the case where the policy with DDF has a non-contribution clause, the coinsurer would be shielded from paying a portion of the payout during the fire case. The clause dictates that once another insurance policy is activated, then the second policy becomes void. This clause protects insurance companies in cases where an insured party takes double insurance. However, when there is a rateable proportion clause, both parties would be liable to pay the agreed portion for the payout after the fire accident had affected the factory in question. They will each pay a portion of the $300,000 payout. 

Question 9 

a) Explain, with justification, the extent of William's legal liability for James' injury. Refer to two statutes in 

support of your explanation. 

There are cases where clients chose to combine their policies for two different subject matters. In the case of William, he took a combined policy for his car storage and parts businesses. Since he owned a building that stores parts and a car storage, the policy coves events that affected both assets. However, the policy dictated that he should always leave the entry points locked when the sites are unattended. Even though he was required to ensure that the site was secure, he fired a security guard reducing the security around the site. In addition, an 11-year-old boy regularly gained access to the site after close of business despite presence of the security guards. Furthermore, William put a sign warning intruders that the site was dangerous. Despite the safeguards put, James was injured while playing in the site. in addition, a customer by the name Sarah was injured while visiting the site to purchase spare parts when a spare car door fell on her foot. 

(b) Explain, with justification, the extent of William's legal liability for Hannah's injury. 

Considering the injury of James, he was an intruder since he went into the site without the consent or knowledge of the owners. In most cases, owners of a property are not liable for injuries that occur in their private property. In the case where a trespasser access private property regularly, the owner is aware that there is continued trespassing ( Lencsis, 1997) . Therefore, the general rule of trespassing which dictates that the owner is not liable for injuries in cases where a person trespasses. The owner of the private property can anticipate that someone might be injured by the dangerous conditions in the site after hours. This is the case in the site of William where trespassers were in danger of being harmed in the site due to the dangerous conditions. Therefore, most states in the U.S. require owners to put signs to warn prospective intruders of the dangers in the site. In this context, when William put a sign that there are dangerous conditions in the site, the owner is only liable when the danger is caused by engaging in wanton and willful activities. However, since the activates of the site were not wanton or willful, and the fact that the owner posted a warning informing potential trespassers that the site was dangerous exempted the owner from any liability. James was not injured as a result of the dangerous or careless actions of the owner. Instead, the site was dangerous on virtue of the items which were stored in the site. For example, if William owner a shooting ranger and a trespasser was shot, he is liable for the injury, especially when he was aware that there were frequent trespasses in the property. Therefore, William was not liable for the injuries experienced by James after he trespassed into the site to play with the cars. 

(c) Discuss the validity of the commercial combined policy if it is established that William had not adequately 

secured the site. 

In the case of Hannah, William was liable for the injuries experienced by the client. Since Hannah was injured while visiting the site to purchase a part, meaning that the owner of the site was liable for her safety. Even though William did not intentionally let the customers face harm. However, accidents happen especially when the site has hazards. When a customer gets injured on the property of a business owner, then William was liable for the event. While looking at a car door, Hannah was injured. William would have taken proactive measures to ensure that the customers were safe when viewing goods at the site. It is not the responsibility of the clients to ensure that they are safe once they were in the facility. In such cases, a business owner needs liability insurance to protect him or herself from any liability that may arise as a result of an injury in the site ( Noussia, 2007) . There are cases when an accident cannot be the fault of an owner and he or she is not liable for the damage caused. However, if the owner was negligent he or she is liable for any injury experienced by the clients. It is important for business owners to take steps to protect customers from injuries caused by the environment ( Lencsis, 1997) . Considering the case, the car door fell on the customer when she was viewing it. Therefore, if the accident was a result of the negligence of William, then the company is liable for the injury. On the contrary, if the injury was a result of a true accident, then the company is not liable for any damages. 

However, in cases where the client is injured in the premise of the business, the company can take several steps to ensure that they cover themselves for any form of liability. For example, they need to ensure that the client gets medical assistance once they are injured. However, the process is different once the treatment is carried out. It is important for the business owner to inspect areas that are faulty or dangerous. It is important for companies to have protocol to follow in the event of an accident to avoid legal liability ( Noussia, 2007) . When an accident occurs, it is important for the company to have insurance cover so that the client can deal with the company when they make a claim. A customer can get injured in the site, hence it is important to have cover and to contact lawyers to ensure that the company is protected from any liability. 

Question 10 

(a) Discuss the extent of Lisa's legal liability in respect of the advice given to Stuart. Refer to two relevant cases in 

support of your discussion. 

Lawyers are at risk of making decisions that may harm the career and that of their law firms. Therefore, in order to protect themselves, lawyers have professional liability cover to ensure that they are protected from claims that may arise as a result of issues arising from legal services and advice. Lawyers are sought for their advice regarding legal issues. However, like any profession, the lawyers are not always right and their advice or actions might lead to liability. For example, when a layer provides advice concerning a case, and it does not go according to plan, then the lawyer is protected from any liability. Professionals are not perfect and they make mistakes from time to time. Therefore, if they were held liable for instances where their actions or advice did not yield the expected outcome. In order to protect professionals, lawyers and other professionals take professional indemnity policy. In the case of Lisa, she took the cover as a lawyer. However, after giving her friend Stuart advice, she was blamed by her client for giving him the wrong advice about a purchase. As a result, he plaintiff lost money in the deal and was claiming damages from the lawyer. However, even though a lawyer’s advice may lead to losses to a client, he or she is only liable after failing to carry out due diligence in a case or if they do not meet their ethical standards. The U.S. supreme court discussed the issue in 2013 since it was a compelling legal argument. According to the case involving Lafler vs Cooper, the plaintiff relied on wrong advice offered by the lawyer. In cases such as plea bargains, lawyers often give the wrong advice to their clients, especially when the lawyers are not invested in the outcome of the case and the fate of their client. A lawyer has a duty to act honestly in all cases. Therefore, it is imperative for a lawyer to have the legal skill required to defend clients. Since a lawyer enjoys client-lawyer privilege, he or she cannot disclose information about the defendant when it is not within the legal confines of the law ( Noussia, 2007) . In addition, a lawyer cannot use information obtained from a client through personal association in a case due to the ethical considerations, dealings between a layer and a client are scrutinized closely to ensure that there is fairness and ensure that there is no undue influence in the advice offered to the client ( Van, 1998) . This approach is aimed to ensure that the client is not used in cases where the layer has information that might influence the outcome of an event or transaction. Layers also have a duty to ensure that they provide their clients with full information about a case to ensure that he or she is protected from any legal liability without being blindsided. 

b) Explain, with justification, the potential remedy available to Stuart for his financial loss. Refer to one relevant case in support of your explanation 

unless Lisa was negligible when giving legal advice, she is not liable to any legal claim since she is protected by the cover she took for her profession. 

(c) Discuss briefly the validity of Lisa's professional indemnity policy with regard to Stuart's claim. 

Lisa’s policy was valid since she did not give advice that went against her ethical responsibilities and professional standards. She did not give advices to benefit her, but she made sure that her services led to the best possible outcome for the client. 

(d) Discuss the legal liability in respect of Lisa's loss of business caused by Stuart's comments. Refer to one relevant case in support of your discussion 

Obviously, the negative review given by Lisa had a negative impact on Stuart’s business. In this context, Stuart’s comments had a negative impact on Lisa’s business. Since the claims were unsubstantiated, the proprietor is entitled to seek legal reprisal for slander in the case when the claims were unproven. The law ensures that proprietors are protected from loss of business in cases where the reputation of a company or individual is placed on the line. 

References 

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Mitchell, C. (2009). Contracts and Contract Law: Challenging the Distinction Between the ‘Real’ and ‘Paper’ Deal, Oxford Journal of Legal Studies, Volume 29, Issue 4, 1 December 2009, Pages 675–704, https://doi.org/10.1093/ojls/gqp023 

Pandey, K. & Rao, T. (2013). A Study on Factors Influencing Claims in General Insurance Business in India. The Journal of Risk Finance . 14. 303-314. 10.1108/JRF-11-2012-0071. 

Pottier, S. & Xu, J. (2017). The Journal of Risk and Insurance: Authors of Influence. Risk Management and Insurance Review. 20. 339-362. 10.1111/rmir.12089. 

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Noussia, K. (2007).  The principle of indemnity in marine insurance contracts: A comparative approach . (Springer e-books.) Berlin: Springer.