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Insurance Contracts Notes

LPC Law Notes > Commercial and IP Notes

This is an extract of our Insurance Contracts document, which we sell as part of our Commercial and IP Notes collection written by the top tier of Cambridge And Oxilp And College Of Law students.

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Elective: Commercial and IP Law

Commercial Law Insurance Law

Basic principles of insurance law
? Client enters into an Insurance Contract - to manage risk!
? Contracts of utmost good faith: insurer has to be made aware of all material information. Impose duty on the client to refrain from making a misrepresentation of material facts.
? Both insurer and insured have a duty to disclose every material fact affecting the risk before the contract is concluded. [Disclose even if the insurer has not asked for the information]
Exceptions =
? Material facts = a fact that would influence the judgment of a prudent insurer in fixing the premium or determining whether he will take the risk [Mis-rep Act S.20(2)]
? The insured must have a "insurable interest" Components of a Standard Insurance policy: Operative
? Extent of cover clause
? Circumstances in which the insurance will become operative
? The Cover provided Exclusions

? Restrictions on the insurance cover

Warranties

? Client may be required to warrant certain facts
? Strict compliance
? Breach of warranty = insurer can avoid insurance policy [insurer can treat his liability at an end].

Nb. Warranties are treated as conditions in Insurance policies

? Breach of disclosure warranty = The contract is valid and binding until it is avoided. It can then be treated as VOID from its beginning - allowing insurer to refuse to deal with any claim arising from the start of period of insurance cover. Courts try to restrict this remedy. Gottleib: remedy available to insurers for a fraudulent claim is forfeiture of the relevant claim, rather than avoidance of the whole contract. Fraud Act 2006 S.3: dishonestly fail to disclose to another person information which they are under a legal duty to disclose and they intended, by that failure to disclose, to make a gain for themselves or cause a loss to another / expose another to risk of loss.
? Requires clear drafting - [i.e. Basis of the contract clause - any precontract representation will be treated as a condition of the contract. Breach will allow the insurer to terminate the contract for an inaccurate representation [i.e. Policy can be avoided even if it was a innocent misrepresentation. Does not have to be a material representation in order for insurer to avoid]. Courts don't generally like this!
? Non-disclosure is harder for insurer to rely on to successfully avoid contract. Harder to prove!

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