QUESTION ONE
(a) Elvira’s house is valued at 800,000 Shillings. She has insured it for 600,000 Shillings

against fire with The Best Payers Insurance Company. She has also insured it against

fire with BPA Insurance Company for 400,000 Shillings. The House is damaged by fire

to the extent of 400,000 Shillings.

Elvira has engaged your services as her lawyer in the case. Advise her on the

following matters:-
i) The procedure which needs to be followed informing the insurance companies of the
incident.
ii) Whether she will successfully sue both Best Payers Insurance Company and BPA
Insurance Company for the loss taking into account the principles of double insurance
and contribution.

(20 marks)

(b) Critically evaluate the role of Insurance Regulatory Authority as the major regulator of

Insurance companies in Kenya.

(10 marks)

SECTION B
QUESTION TWO
(a) “The fundamental rule of insurance is that the contract of insurance contained in a
marine or fire policy is a contract of indemnity, and of indemnity only, and this contract
means that the assured, in the case of a loss against which the policy has been made, shall
be fully indemnified, but shall never be more than fully indemnified” per Brett LJ in
Castellain v Preston ( 1883) 11 QBD 380.
With the aid of case law discuss the factors which Insurance companies must take into
account in the computation of indemnity in relation to real property and goods.

(20 marks)
QUESTION THREE
“The Contract of Insurance is the primary illustration of a class of contracts
described as uberimaefidei, which is of the utmost good faith. “ Anonymous
Discuss instances when parties to an insurance contract must uphold their duty.

(20 marks)
QUESTION FOUR
Insurable interest was defined by Lord Eldon LC in Lucena v Craufurd(1806) 2 Bos &
P.N.R. 269 in the following words:-
“A right in property, or a right derivable out of some contract about the property,
which in either case may be lost upon some contingency affecting the possession or
enjoyment of the party.”
Discuss with the aid of case law, the applicability of insurable interest in life and property.

(20 marks)
QUESTION FIVE
‘Subrogation is one means by which the insured is prevented from obtaining more
than a full indemnity. ‘Anonymous
With the aid of decided cases discuss the validity of the statement

(2o marks)

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