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Insurance Contracts Notes

LPC Law Notes > Commercial and IP Notes

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A more recent version of these Insurance Contracts notes – written by Cambridge And Oxilp And College Of Law students – is available here.

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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


? 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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