Questions and Answers
What was the main issue in the case of Castellain v Preston?
Define indemnity insurance.
Indemnity insurance is insurance where the actual loss of the insured is indemnified to the insured by the insurer.
Define non-indemnity insurance.
In non-indemnity insurance, the insurer agrees to pay an agreed amount upon the occurrence of the insured event.
Summarize the decision in Reynolds and Anderson v Phoenix Assurance Co Ltd.
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What was the basis of indemnity determined in Leppard v Excess Insurance Co Ltd?
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What was held in the case of Elcock v Thomson?
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In Rayner v Preston, the insured had a right to insist on a money payment.
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What was the significant outcome in Brown v Royal Insurance?
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What question does Kalten Bach v Mackenzie raise?
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What issue was presented in Holmes v Payace?
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What is discussed in Rankin v Potter?
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Study Notes
Castellain v Preston
- Case involving property sold by Preston to tenants (Rayner) before a fire occurred.
- Preston claimed reimbursement from his insurer.
- Insurer recovered settlement since Preston suffered no loss post-sale.
- Judge noted insurance contracts as indemnity agreements, ensuring insured can only recover losses without profit.
Indemnity Insurance
- Designates insurance compensating actual losses to restore the insured's prior position.
- Insured cannot profit from the events causing the loss.
- Illustration in Castellain v Preston reinforces this principle.
Non-Indemnity Insurance
- Insurer pays a predetermined sum upon occurrence of insured event.
- Examples include life and accident insurance; focuses on agreed payouts rather than loss restoration.
- No rights of subrogation or contribution among insurers exist under non-indemnity policies.
Re Write and Pole
- Case focused on an inn's destruction by fire.
- Insured not entitled to coverage for loss of trade or hiring excess premium.
Richard Alsbrey Film Production Ltd v Graham
- Film producer's policy covered film negatives that were stolen.
- Insurance only covered market value of completed films minus production costs, excluding personal value.
Reynolds and Anderson v Phoenix Assurance Co Ltd
- Case of substantial fire loss at a malting facility.
- Judge proposed three potential indemnity bases: market value, replacement cost, and reinstatement cost.
- Court favored reinstatement cost due to insured's intention to restore original condition.
Leppard v Excess Insurance Co Ltd
- Cottage lost to fire, insured sought rebuilding costs.
- Court's decision contrasted Reynolds; market value applicable since insured intended to sell the property.
Dominion Mosaics & Tile Co Ltd v Trafalgar Trucking Co Ltd
- Determined appropriate loss measure as the cost of acquiring new premises to mitigate income loss.
- Cost for new premises was lower than reconstructing the original structure.
Exchange Theater Ltd v Iron Trades Mutual Insurance Co Ltd
- Fire damaged a bingo hall in Victorian Hall.
- Court ruled indemnity based on cheaper modern building costs suitable for insured needs.
Carreras Ltd v Cunard Steamship Co
- Suggested permission of implied average in commercial insurance policies.
Sillem v Thornton
- Court found that average could not be implied for fire policy covering a house.
Elcock v Thomson
- Established rules for partial loss under undervalued policies.
- Insured cottage valued significantly less than agreed; entitled to compensation based on percentage reduction.
Rayner v Preston
- If a policy lacks clauses for alternate compensation, insured can demand monetary payment.
Al Chorne v Favill
- Court found insurers liable when prevented from reinstating a building due to regulations.
- New building deemed inferior; damages were granted.
Brown v Royal Insurance
- Policies typically include clauses allowing insurers to opt for repair/reinstatement.
- Once a choice is made, insurers cannot withdraw. Must fulfill contract or pay damages if performance is unfeasible.
Smith v Colonial Mutual Fire Insurance Co Ltd
- Insurers act as their own insurers during reinstatement and cannot deduct amounts due to performance issues.
Kalten Bach v Mackenzie
- Explores abandonment and notice of abandonment within maritime insurance policies.
Holmes v Payace
- Related to salvage and abandonment in non-marine insurance involving total loss of stolen jewelry.
Rankin v Potter
- Focus on salvage and abandonment concerning fire insurance, where insurers may retain leftover materials after a fire.
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Description
Explore the principles of indemnity and non-indemnity insurance through the case of Castellain v Preston. This quiz covers key concepts such as property loss recovery, insurance agreements, and loss restoration. Gain insights into the distinctions between different types of insurance contracts.
