3.2 Principles of Insurance Law: Warranties and Conditions Flashcards
Under what part of IA can you contract out
16/17
What happens if one insurer pays more than his share, and others were also liable
He can get contribution from other insurers (80(2))
What happens if 2 CoIs have an escape clause
They cancel each other out
W as to facts are created through what 2 mechanisms in a CoI (including 1 allowed prior to IA)
Basis of C or CP
What case covers the ‘recover down’ principle for subrogated recovery in the case of underinsurance
Lord Napier v RF Kershaw
What are ‘bare conditions’ in CoI
Govern mechanics of CoI
Who can insured recover from, generally speaking, in the case of double insurance
Either insurer
What case showed automatic discharge of liability for BoW under MIA, but payment Os of insured continue
The Good Luck case
Could insured remedy the BoW to revive the contract under MIA
No - 34(2) MIA
What happens if there are 2+ dominant causes of loss and only one = insured peril
Must be of equal weight, but then covered
What is insurer likely to do if insured prejudices their rights
Refuse to pay claim and/or bring counterclaim for damages
What part of what Act stated that W need not be material, but did need to be exactly complied with (pre-IA)
33(3) MIA
What were the 3 tests in HIH Casualty
Go to root of the risk, describe or material to the risk, or damages unsatisfactory
Instead of automatic discharge of CoI for BoW, what happens under IA
Suspension of insurer’s Os until remedied (10)
What happens if there are 2+ dominant causes of loss and one is excluded?
Policy will not respond
What meaning are words given first
Ordinary, then technical, then see case law
What parts of what statutes abolished basis of C clauses
9 IA + 6 CI(DR)A
When might a 3rd party be worth pursuing in a surrogated claim
If insured
What is ‘average’
Insufficient insurance to cover entire cost of property - working out for what proportion insured if their own insurer
Three ways to create warranties
Expressly, impliedly and through basis of C clause
At CL, what must insurer do before can step into insured’s shoes and pursue 3rd
Pay insured in full
Why is it important that, if insured is suing 3rd, they also include insurers’ losses
Only a single cause of action can lead to a single claim for damages - cannot have multiple CoAs for single claim
What can insurer do if BoW (e.g. for goodwill)
Waive - equitable estoppel
The Good Luck case ratio
Insurer automatically discharged from liability for BoW under MIA, but payment Os of insured continue
3 cases when a subrogated claim cannot be brought
Insured has already brought claim, insured cannot bring claim, or other party is the insured/also insured by/benefits from the policy
HIH Casualty did what
Set down 3 tests for if W = W
What is contribution
More than one insurer covers same insured for same risk - each insurer contributes rateably to loss in proportion to risk
Three kinds of warranties
Continuing, as to facts, or of opinion
Breach of condition (that isn’t CP) = what
Damages
What is the effect of 11 IA applying to CPs
Breach of CP relating to particular loss unrelated to loss covered cannot be relied on to avoid paying claim
Lord Napier v RF Kershaw ratio
Recover down principle
What conditions are important
Condition precedents
W as to facts relate to what
past or present facts
What case set down 3-stage test for Ws to be Ws
HIH Casualty
What happened if BoW under MIA
Automatic discharge of liability and termination, w/o need for election
What must there be a substantial overlap of for there to be double insuranc (x5)
Insured, risk, interest, policy period and subject matter
Instead of automatic discharge of CoI for BoW, what happens under CI(DR)A
Suspension of insurer’s Os until remedied (10 IA applies)
What rights does insurer assume when subrogating insured
Only insured’s rights against 3rd - so subject to exclusions
Two kinds of subrogation
Recoup money recovered from insured from culpable 3rd, or step into insured’s shoes to pursue 3rd
What case suggested that BoW in Proposal Form means no CoI ever came into existence (under MIA)
De Hahn v Hartley
If creating Ws expressly, follow what case
HIH Casualty v New Hampshire
What CL duty does an insured have generally regarding insurer’s rights
Not to prejudice their rights at any point
From when does IA apply
12/08/2016
Why must insured include the insurer’s losses as well when bringing claim against 3rd
Can only claim in insured’s name once against 3rd party
What happens if there is underinsurance + recovery in surrogated claim?
Insured paid amount for which they insured themselves, insurer paid amount paid to insured, and insured recovers excess
Insured should not make a profit from CoI - what case
Castellain v Preston
Is it necessary to satisfy all 3 tests in HIH Casualty?
No - only one
What is CP to liability
Insured must do X before insurer is liable for loss
Who gets paid second under Lord Napier
Insurer for amount paid to insured
What is an escape clause
Excluding liability in case of double insurance
Which go to the root of CoI - warranties or conditions
Warranties
After subrogation, when can insured keep a sum despite already being indemnified by insurer
If the sum goes above amount paid to them by the insurer
Yorkshire v Nisbet ratio
After subrogation, insured can keep any sum above amount paid to them by the insurer
What are continuing Ws
Promise of future conduct
What is the doctrine that stops insurer relying on BoW to discharge/suspend when breach waived
Equitable estoppel
What should you consider before exercising subrogation
If 3rd is worth pursuing
Is terminology determinative for CPs
No
When is W of opinion breached
If false AND dishonest/reckless
Who is the BoP on for causation - dominant cause of loss = insured peril
Insured
If W relates to a particular loss, what happens when BoW of that W under CI(DR)A
Need link between BoW + loss (as under IA) AND consumer aware of the term (ICOBS 8.1.2(3))
What part of MIA applies to contribution
80 MIA
BoW = what
Discharged or suspended CoI
Two ways of impliedly waiving BoW
Accepting premiums or claims handling
What part of IA applies to CPs
11 IA
Can Ws be created impliedly in any case?
No - only in marine
Who runs a claim before insurer entitled to subrogation
Insured
What are some examples of when the insured cannot bring a claim, so no subrogation permitted
Limitation period, immunity under policy (i.e. policy does not allow subrogation), insured doesn’t exist
Two kinds of CPs
CP as to risk and as to liability
What is a rateable proportion clause
Requiring insured to claim from each insurer - each insurer only contributes rateably
What does average mean in marine insurance
Loss - particular is partial, and general is when asset insured by one scarified to save assets insured by others
De Hahn v Hartley ratio
CoI did not exist until W literally complied with
What is CP to risk
Insured must do X before insurer goes on risk
After subrogation, insured can keep any sum above amount paid to them by the insurer - case
Yorkshire v Nisbet
What might a CoI have in it to avoid contribution
Escape, rateable proportion or excess clause
What is an example of when the other party is the insured so no subrogation allowed
1 owner of 2 assets that caused loss, e.g. boats colliding
Sum for working out average
(Sum insured / value of property) x loss = claims payment
Where defined Ws pre-IA
33(1) MIA
If one insurer has RP clause, and other escape + excess clause, RP clause triggered (and exhausted) first - WHAT CASE?
NFU v HSBC
Who gets paid third under Lord Napier
Insured for the excess paid
Who gets paid first under Lord Napier
Insured for amount they insured themselves
What is an excess clause
Turns insurance into excess policy - only responds once other policy exhausted
NFU v HSBC ratio
If one insurer has RP, and other escape + excess, RP clause triggered (and exhausted) first
What condition of subrogation is usually excluded under CoI
Need to pay insured in full before rights can be exercised
Castellain v Preston laid down what principle
Insured should not make a profit from CoI
If insured decides to claim from culpable 3rd after being indemnified, what losses should insured include
Both insured and its own uninsured losses
If W relates to a particular loss, what happens when BoW of that W under IA
Must be link between breach + loss actually suffered to rely (11)
