When Shelley Was Filling in a Proposal Form for Insurance

question 8

Multiple Choice

When Shelley was filling in a proposal form for insurance cover for her house she was asked 'Has your property ever been infested with termites?' Shelley had found a few termites in a tree in her backyard last year.She sprayed them and they appeared to have been killed.She answered 'no' to the question because she believed that 'property' meant her house and 'infested' meant large numbers of termites.When Shelley claimed for storm damage the insurance company learnt about the termites in the tree and refused to pay her claim.Which of the following statements most accurately reflect Shelley's legal position?

• A)The insurer is not required to pay because the common law prudent insurer test has been abolished.
• B)The insurer is not required to pay because Shelley did not honestly and reasonably believe her statement to be true.
• C)The insurer must pay because Shelley is not claiming for termite damage.
• D)The insurer must pay because the question was ambiguous or unclear and a reasonable person would have interpreted it in the same way as Shelley.

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