Question 5 – Learning Outcome 6 (20 marks)
Olivia owns an office premises. The office is insured under a commercial combined insurance policy, whichstates the following:
• ‘The burglar alarm must be maintained in full working order at all times and activated when the premisesare unattended.’
• ‘The insured must remove the safe keys from the premises when the premises are unattended.’One evening, Olivia left the office and thought she had activated the burglar alarm. During the night a breakin occurred, but the alarm failed to work. Olivia believes that the burglar alarm may have been faulty. The break in resulted in loss of cash from the safe in the office. The safe was opened using keys that hadbeen left in the office.Olivia makes a claim for the loss of cash from the safe.
(a)Discuss the effect on both the policy and the claim, of the failure of the burglar alarm. Refer toone statute in support of your discussion.(12)
(b)Explain, with justification, the effect on both the policy and the claim, of Olivia’s failure to removethe safe keys from the office premises.(8)