Warranties, Conditions, Premiums

Warranties, Conditions, Premiums

1. Warranty is a promise made by the insured to the insurer. Must be strictly complied with. If broken insurer discharged from that point DEHAHN V HARTLEY

2. Must be incorporated as a term in the insurance contract

3. BASIS OF THE CONTRACT

   • a business policy may contain a 'basis of the contract clause'.
   • Judges interpret this strictly PROVINCIAL INSURANCE CO V MORGAN (coal case)

4. Warranty Problems

   • In June 2012,law commission set out 4 key problems
     • 1. The insurer may refuse a claim for a trivial mistake which has no bearing on the risk
     • 2. The insured cannot use the defence that the breach was remedied before the loss
     • 3. The breach of a warranty discharges the insurer from all liability
     • 4. Something that appears to be an innocuous statement can be converted into a full warranty using obscure words that most policy holders do not understand

5. REFORM PROPOSALS

   • 1. Breach of warranty should suspend the insurers liability for the duration of the breach.
   • 2. A term designed to reduce particular risk can only suspend liability in relation to that risk
   • 3. Abolition of basis of the contract clause for business insurance as well as for consumer insurance

6. POLICIES AFTER 12 AUG 2016

   • abolishes breach of warranty resulting in discharge

7. Non compliance with one aspect does not effect liability in terms of risk of another aspect

8. A non-consumer is absolutely protected from an amendment to the operation of s9 regarding basis of the contract cluases, but there are transparency requirements .

   • For consumer insurance contracts, and insurer will generally not be able to put a consumer in a worse position than they would be in terms of legislation

9. CONDITIONS

   • a breach of condition is a breach of contract but does not discharge insurer from performance
     • conditions often govern claim procedure or give the insurer rights to pursue a claim in the name of the insured after payment
   • If breached, a condition precedent to the insurers liability may function to prevent any claim
     • A breach of mere condition in insurance law usually only allows the insurer to claim damages for any loss the breach causes it to suffer

10. PREMIUMS

    • Can recover premium if: there is no illegality, the policy is canceleld/void, the insurer has not been at risk, the policy so provides

11. Is the loss one covered by the policy?

    • If there is no covered loss caused by a covered risk the insurer need not pay any claim. If there is dispute, we resolve it by considering:
      • what the contractual terms of the policy say
      • what the contractual terms of the policy mean
      • was the covered loss mainly caused by a covered risk?

12. Construction of contractual terms

    • aim is to establish the intention of the parties
    • A new approach: INVESTORS COMPENSATION SCHEME V WEST BROMWICH BUILDING SOCIETY
      • discover the meaning that the document would have to reasonable person and ignore previous negotiations and subjective declarations of intent
    • give words ordinary meaning
      • LEO RAPP LTD V MCCHURE
    • technical meaning often trump, context also relevant YOUNG V SUN ALLIANCE
    • 'Accident' in 3rd party looks at insured's POV

13. If missing is it lost? HOLMES v PAYNE. Cannot be recovered? MOORE V EVANS

14. Proximate cause SYMINGTON v UNION INSURANCE OF CANTON

15. Making a claim

    • Must give the insurer notice of the fact of the loss by specified method and within specified time limit
    • Must also provide particulars WELCH v ROYAL EXCHANGE INSURANCE
    • The insurer may take reasonable time to investigate