Commercial Law Essay Example | Topics and Well Written Essays - 2000 words - 1

Commercial Law - Essay Example For the agreement to be effective, the assured has to inform the insurer of certain information about the thing that he or she wants to be insured. The assured can be an individual or a company and is expected by law to insure something that has money value. In other cases, the person or the company can insure a person who she or he values, for example, a wife insuring her husband. Scenario Steve is a customer who has an insurance policy to cover the house which he constructed in 1940. When he was agreeing with Home Protection Insurance to cover his house, he said that the house was built using concrete blocks but in reality it was built using straw bale. He failed to provide information on the strength of the building materials even though the company asked him. One month after getting the cover to protect his house, a severe storm damaged his house together with the items inside the house (Kelly, 1997). Analysis and facts Steve should have been aware of the following facts so that the Home Protection Insurance Company could compensate him when his house was damaged by a severe storm. The request to insure the house by Home Protection Insurance was intended by Steve but he forgot to disclose all the information concerning his house. For example, he did not mention that his house was very old and that it was built with materials that could not last long, therefore, increasing the risk to the company. If the company could have known this information by the time they were writing the policy they could have maybe increased the premium per month (Dobson, 1997). The communication between Steve and Home Protection insurance was not properly done and what was insured was not clearly described. The communication process was also not clear because the kind of damage which Steve insured against was not disclosed. For example, neither Steve nor the Home Insurance Company stated whether it was a fire insurance or burglary. Steve did not also take time to test whether the i nsurance cover could work for him before officially signing it. The law of insurance states that, â€Å"the alleged offer must be in force at the time when the other party purports to accept it.† The time taken before the insurance fully comes into force is important because the customer can gauge how well it can work for the intended needs. Steve did not take this into consideration when he was taking the cover (Ellison, 1997). The agreement between Home Insurance Company and Steve is important when claiming the insured value of money after damage has occurred. A detailed analysis of every factor that can arise and affect the agreement should have been discussed. The facts which are known to the Home Insurance Company about house insurance covers, should have been discussed. Home Protection Insurance Company is well experienced in issues dealing with house insurance and, therefore, it has fine details that people do not recognize when it comes to dealing with house covers. A nother important detail the law of insurance is concerned with, and that should be captured when formulating an insurance cover, is the information which is hidden. However, Home Insurance Company can get this information by deeply interviewing the customer (Dobbyn, 2003). Although the insurance company tried to interview Steve, most of