2.10. Alan had a funeral policy to the amount of R50 000 . He died whilst walking along railway tracks, whereafter he was knocked down by a train. The insurer refuses to settle the claim, arguing that Alan was acting illegally in trying to cross the railway track, which is regarded as a criminal offence as this was not a place where there was a pedestrian crossing. Choose the correct statement. A. The insurer is acting within their rights to reject the claim as a result of the alleged criminal offence committed, provided this is mentioned in their terms. B. The insurer is not allow to exempt themselves of liability in terms of the Policyholder Protection Rules. C. A criminal offence is regarded as an automatic rejection of a claim in terms of legislation. D. The insurer can impose a fine on the deceased estate, but has to settle the claim. E. None of the above

Question

UpStudy AI · Accepted Answer

**Step 1: Identify the Key Facts**

- Alan had a funeral policy of $$ R50\,000 $$.
- He died while walking along railway tracks.
- He was knocked down by a train.
- The insurer refuses to settle the claim, arguing that Alan was acting illegally (trying to cross the railway track in a non-designated area) which is considered a criminal offence.
- The question asks to choose the correct statement.

**Step 2: Analyze the Options**

- **Option A:** “The insurer is acting within their rights to reject the claim as a result of the alleged criminal offence committed, provided this is mentioned in their terms.”
  
  *Analysis:* For an insurer to be allowed to reject a claim due to the policyholder's criminal behavior, such an exclusion must be explicitly included in the policy’s terms and conditions. In many regulatory environments, policyholder protection rules limit the insurer's ability to exclude claims solely on the basis of criminal conduct unless very specific conditions are met. Hence, it's likely that merely committing a criminal offence (when such conduct is not directly related to the risk insured) would not automatically allow the insurer to reject the claim.

- **Option B:** “The insurer is not allowed to exempt themselves of liability in terms of the Policyholder Protection Rules.”
  
  *Analysis:* Policyholder Protection Rules in many jurisdictions safeguard the interests of the policyholder, limiting the ways insurers can avoid paying out claims. This option implies that, regardless of any criminal act that might have been committed by the insured, the insurer is bound by protections that prevent them from denying the claim.

- **Option C:** “A criminal offence is regarded as an automatic rejection of a claim in terms of legislation.”
  
  *Analysis:* This is a broad statement. In practice, a criminal offence does not necessarily result in an automatic rejection of an insurance claim unless it specifically violates a stated exclusion that is enforceable under the relevant law. Therefore, this cannot be accepted as a correct general rule.

- **Option D:** “The insurer can impose a fine on the deceased estate, but has to settle the claim.”
  
  *Analysis:* This option introduces a notion of the insurer imposing an additional fine on the estate, which is not a standard practice and does not align with typical insurance or legal procedures regarding claims.

- **Option E:** “None of the above.”
  
  *Analysis:* Since Option B seems to be consistent with the idea of consumer protection in insurance, Option E is unlikely to be correct.

**Step 3: Conclusion**

Regulatory frameworks such as the Policyholder Protection Rules are designed to protect policyholders from having their valid claims denied due to activities that, while potentially criminal, do not directly relate to the risk covered by the policy. In this case, since the insurer is trying to invoke the criminal offence to avoid settling the claim, they are likely acting outside these protected boundaries.

Thus, the correct statement is:

$$ 	extbf{B. The insurer is not allowed to exempt themselves of liability in terms of the Policyholder Protection Rules.} $$
The insurer cannot deny the claim based on the policyholder's criminal offense because the Policyholder Protection Rules prevent them from doing so.

Upstudy AI Solution

Answer

Solution

Beyond the Answer

Related Questions

Latest Economics Questions