Question 2 a)

Miss Margaret insured her house for Ksh.4,000,000 with Linda Mali Insurance Co. Ltd. The
market value of the house is Ksh.5,000,000. In the process of squaring out with her enemies a
fire broke out and caused Ksh.2,000,000 worth of damage.
I. How much compensation will she receive from Linda Mali Insurance Co. Ltd?

ii. Explain any factors Linda Mali Insurance Co. Ltd will take into considerations
before making
For most claims, the cause is obvious and can therefore be determined relatively easily
whether the risk is covered by the policy. Difficulties arise when there are exceptions
of the guideline or if more than one cause has worked and not all are covered. The immediate
cause must be established before a decision can be made as to whether the loss or damage is
covered by the policy.
A general rule applies to the burden of proof. The policyholder must prove that an insured
risk has caused the loss or damage, and then it is up to the insurer to demonstrate the
effectiveness of an exclusion (if he wishes to refuse compulsory insurance).
The situation is slightly different with an All Risks Policy. In that case, the policyholder only
needs to prove that damage has occurred to the insured item during the insurance term. If an
insurer wishes to apply an exclusion, the insurer must prove that the cause was one of the
excluded events.
If one or more perils have occurred and one or more of those perils are covered by the policy,
then the resulting loss or damage is covered. In some cases, however, this is not the end of it,
as different exceedances may apply to the different hazards. You must then determine at what
risk you pay the damage (and therefore which deductible is applied). Keep in mind that your
choice of risk may affect reinsurance or double insurance.
In deciding whether the damage was caused by one of the insured risks, the next or the last
cause must be investigated and others rejected. If damage is caused by the simultaneous
occurrence of several dangers and one of the dangers is an uninsured risk, the insurer is liable
to the extent of the consequences of the insured risk, if these can be determined separately.
The insurer is not liable if the effects of the insured risk and the expected risk cannot be
separated.
therefore;
1. You must immediately establish a reason to determine whether a loss is covered by the
policy.
2. Immediate cause is defined as the active and effective cause that initiates a sequence of
events that produce a result without the intervention of a force that is actively deployed and
works from a new and independent source.
3. The policyholder must prove that an insured risk caused the damage. If the insurer
subsequently wishes to reject the claim, it must prove that there is an exclusion.

Question 2 b)

b. In an attempt to protect the hirer’s interests, the Hire Purchase Act employs 3
mechanisms. Identify and explain such mechanisms.
The hire-purchase law makes timid attempts to protect or protect the interests of the tenant, it
adopts or applies 3 mechanisms;
1. Content of the hire-purchase contract
2. Implied terms
3. Return of goods
Content of hire-purchase contracts
(1) Any hire-purchase contract must mention:
a) the hire-purchase price of the goods to which the contract relates,
(b) the cash price of the goods, d. H. the price at which the goods can be purchased by the
lessee against cash payment,
(c) The date on which the Agreement is deemed to have entered into force.
d) the number of instalments in which the hire purchase price is to be paid, the amount of
each such instalment and the date or manner of determining when it is due and the person to
whom and the place where he is paid, and
e) the goods to which the contract relates in a manner sufficient to allow their identification.
(2) To the extent that a part of the hire purchase price is not payable in cash or by check, the
hire purchase agreement contains a description of the part of the hire purchase price.
(3) If one of the conditions mentioned in paragraph 1 or in paragraph 92 is not fulfilled, the
lessee may declare the hire-purchase contract null and void; the court, if it is convinced that
failure to comply with this requirement will adversely affect the tenant, may terminate the
contract within such time as it deems appropriate or make any other arrangement it deems
appropriate in the circumstances of the case .

Implied terms
Hire purchase is a business concept where owners agree to lease their property to someone
else (the tenant) with the option for the tenant to purchase the goods after the lease has
expired. .
The landlord is usually a financial institution that technically acquires the goods from a
reseller and then leases them to the tenant at the end of the contract with the option to lease
them.
There are a few terms that are considered fundamental in a hire purchase agreement. These
basic conditions are generally implied in a hire purchase agreement as conditions and
guarantees under section 7 of the Hire Purchase Act 1967:
I. an implied guarantee that the tenant will peacefully own the goods;
ii. an implied condition that the owner has the right to sell the goods at the time of transfer of
ownership; and
iii. a tacit requirement of the usual quality of the good, unless the good is in service or the
lessee has examined the good and found defects which should have resulted from the
investigation.
The implied warranty that a tenant has the goods at rest means that in a hire purchase
transaction, the tenant has the right to dispose of the goods for the term of the hire purchase
agreement without the intervention of the landlord. The owner of the goods cannot take back
the goods from the tenant as long as the tenant is not late in paying the down payments due.
This is a basic concept understood by the owner and the tenant under a hire purchase
agreement.
In the event of a disturbance in the undisclosed possession of the goods by the owner, the
renter can assert the breach of the implied warranty against the owner. However, a tenant
cannot blame the landlord if the malfunction was caused by a third party. For example, if a
vehicle is confiscated by customs (as part of a hire-purchase transaction) due to non-payment
of related duties. The lessee must determine who is responsible for customs duties under the
hire purchase agreement. The responsibility for paying customs duties generally rests with
the lessee or reseller of the goods, depending on the terms of the contract.
In other words, it is only if a landlord is directly responsible for the tenant's peaceful property
disturbance that there can be a breach of this implied warranty.

Return of goods
Under the Hire Purchase Act, the landlord has the right to claim the property at any time in
the event of default, but Section 15 of the Hire Purchase Act protects the tenant. It provides
that if the tenant has paid an amount equal to 2/3 of the total amount or more, all steps to
regain ownership of the property, unless the tenant has terminated the contract, the owner of
the property has recourse only to to a court. If the owner takes back the goods against this
rule then: -
a. The contract is deemed to be terminated.
b. The tenant is released from all obligations resulting from the contract.
c. The hirer is entitled to recover from the owner all amounts paid under the contract
including deposit.
d. A guarantor shall be released from all liabilities and may recover any amounts or security
given by him under the contract.