Question 2 (24 marks) KK supermarket sells supreme quality groceries locating in Central. The shop owner purchased commercial insurance insuring his business against money loss, theft and public liability from Jump Insurance. Last month, KK supermarket was burglarized, $20,000 cash and 10 boxes of abalone (valued $10,000) were lost. However, Jump Insurance denied coverage under the policy as the alarm system was disabled at the time of loss. Jump Insurance insisted that the owner is obligated to ensure the alarm system is well-functioning. KK supermarket appealed that “installation of security alarm system is required” is the only policy wordings stated in the insurance contract. Following the loss prevention measure required by Jump Insurance, KK supermarket installed a security alarm system by an approved security company. On the ground of the “installation of security alarm system is required” is the only policy wordings as loss prevention measure in the insurance contract, the court verdict stated that Jump Insurance cannot deny coverage and should pay on KK supermarket’s claim due to the burglary.
(a) What is a peril? Identify the peril based on the above information. (4 marks)
(b) Which part of insurance contract that specified the required loss prevention measures for the coverage? Describe briefly. (4 marks)
(c) Attorney defended KK supermarket with legal principle(s) and/or characteristic(s) in insurance contract. Hence, KK supermarket can recover loss from Jump Insurance in the court verdict. What are the arguments? Explain. (10 marks)
(d) KK Supermarket gets no more than the actual amount of the loss regardless the number of commercial insurance policies the shop owner bought for his business. Which ONE of the principles of insurance does it refer? What are its purposes? (6 marks)