3.2 Principles of Insurance Law: Warranties and Conditions

Question 1

Under what part of IA can you contract out

Answer 1

16/17

Question 2

What happens if one insurer pays more than his share, and others were also liable

Answer 2

He can get contribution from other insurers (80(2))

Question 3

What happens if 2 CoIs have an escape clause

Answer 3

They cancel each other out

Question 4

W as to facts are created through what 2 mechanisms in a CoI (including 1 allowed prior to IA)

Answer 4

Basis of C or CP

Question 5

What case covers the ‘recover down’ principle for subrogated recovery in the case of underinsurance

Answer 5

Lord Napier v RF Kershaw

Question 6

What are ‘bare conditions’ in CoI

Answer 6

Govern mechanics of CoI

Question 7

Who can insured recover from, generally speaking, in the case of double insurance

Answer 7

Either insurer

Question 8

What case showed automatic discharge of liability for BoW under MIA, but payment Os of insured continue

Answer 8

The Good Luck case

Question 9

Could insured remedy the BoW to revive the contract under MIA

Answer 9

No - 34(2) MIA

Question 10

What happens if there are 2+ dominant causes of loss and only one = insured peril

Answer 10

Must be of equal weight, but then covered

Question 11

What is insurer likely to do if insured prejudices their rights

Answer 11

Refuse to pay claim and/or bring counterclaim for damages

Question 12

What part of what Act stated that W need not be material, but did need to be exactly complied with (pre-IA)

Answer 12

33(3) MIA

Question 13

What were the 3 tests in HIH Casualty

Answer 13

Go to root of the risk, describe or material to the risk, or damages unsatisfactory

Question 14

Instead of automatic discharge of CoI for BoW, what happens under IA

Answer 14

Suspension of insurer’s Os until remedied (10)

Question 15

What happens if there are 2+ dominant causes of loss and one is excluded?

Answer 15

Policy will not respond

Question 16

What meaning are words given first

Answer 16

Ordinary, then technical, then see case law

Question 17

What parts of what statutes abolished basis of C clauses

Answer 17

9 IA + 6 CI(DR)A

Question 18

When might a 3rd party be worth pursuing in a surrogated claim

Answer 18

If insured

Question 19

What is ‘average’

Answer 19

Insufficient insurance to cover entire cost of property - working out for what proportion insured if their own insurer

Question 20

Three ways to create warranties

Answer 20

Expressly, impliedly and through basis of C clause

Question 21

At CL, what must insurer do before can step into insured’s shoes and pursue 3rd

Answer 21

Pay insured in full

Question 22

Why is it important that, if insured is suing 3rd, they also include insurers’ losses

Answer 22

Only a single cause of action can lead to a single claim for damages - cannot have multiple CoAs for single claim

Question 23

What can insurer do if BoW (e.g. for goodwill)

Answer 23

Waive - equitable estoppel

Question 24

The Good Luck case ratio

Answer 24

Insurer automatically discharged from liability for BoW under MIA, but payment Os of insured continue

Question 25

3 cases when a subrogated claim cannot be brought

Answer 25

Insured has already brought claim, insured cannot bring claim, or other party is the insured/also insured by/benefits from the policy

Question 26

HIH Casualty did what

Answer 26

Set down 3 tests for if W = W

Question 27

What is contribution

Answer 27

More than one insurer covers same insured for same risk - each insurer contributes rateably to loss in proportion to risk

Question 28

Three kinds of warranties

Answer 28

Continuing, as to facts, or of opinion

Question 29

Breach of condition (that isn't CP) = what

Answer 29

Damages

Question 30

What is the effect of 11 IA applying to CPs

Answer 30

Breach of CP relating to particular loss unrelated to loss covered cannot be relied on to avoid paying claim

Question 31

Lord Napier v RF Kershaw ratio

Answer 31

Recover down principle

Question 32

What conditions are important

Answer 32

Condition precedents

Question 33

W as to facts relate to what

Answer 33

past or present facts

Question 34

What case set down 3-stage test for Ws to be Ws

Answer 34

HIH Casualty

Question 35

What happened if BoW under MIA

Answer 35

Automatic discharge of liability and termination, w/o need for election

Question 36

What must there be a substantial overlap of for there to be double insuranc (x5)

Answer 36

Insured, risk, interest, policy period and subject matter

Question 37

Instead of automatic discharge of CoI for BoW, what happens under CI(DR)A

Answer 37

Suspension of insurer's Os until remedied (10 IA applies)

Question 38

What rights does insurer assume when subrogating insured

Answer 38

Only insured's rights against 3rd - so subject to exclusions

Question 39

Two kinds of subrogation

Answer 39

Recoup money recovered from insured from culpable 3rd, or step into insured's shoes to pursue 3rd

Question 40

What case suggested that BoW in Proposal Form means no CoI ever came into existence (under MIA)

Answer 40

De Hahn v Hartley

Question 41

If creating Ws expressly, follow what case

Answer 41

HIH Casualty v New Hampshire

Question 42

What CL duty does an insured have generally regarding insurer's rights

Answer 42

Not to prejudice their rights at any point

Question 43

From when does IA apply

Answer 43

12/08/2016

Question 44

Why must insured include the *insurer's* losses as well when bringing claim against 3rd

Answer 44

Can only claim in insured's name once against 3rd party

Question 45

What happens if there is underinsurance + recovery in surrogated claim?

Answer 45

Insured paid amount for which they insured themselves, insurer paid amount paid to insured, and insured recovers excess

Question 46

Insured should not make a profit from CoI - what case

Answer 46

Castellain v Preston

Question 47

Is it necessary to satisfy all 3 tests in HIH Casualty?

Answer 47

No - only one

Question 48

What is CP to liability

Answer 48

Insured must do X before insurer is liable for loss

Question 49

Who gets paid second under Lord Napier

Answer 49

Insurer for amount paid to insured

Question 50

What is an escape clause

Answer 50

Excluding liability in case of double insurance

Question 51

Which go to the root of CoI - warranties or conditions

Answer 51

Warranties

Question 52

After subrogation, when can insured keep a sum despite already being indemnified by insurer

Answer 52

If the sum goes above amount paid to them by the insurer

Question 53

Yorkshire v Nisbet ratio

Answer 53

After subrogation, insured can keep any sum above amount paid to them by the insurer

Question 54

What are continuing Ws

Answer 54

Promise of future conduct

Question 55

What is the doctrine that stops insurer relying on BoW to discharge/suspend when breach waived

Answer 55

Equitable estoppel

Question 56

What should you consider before exercising subrogation

Answer 56

If 3rd is worth pursuing

Question 57

Is terminology determinative for CPs

Answer 57

No

Question 58

When is W of opinion breached

Answer 58

If false AND dishonest/reckless

Question 59

Who is the BoP on for causation - dominant cause of loss = insured peril

Answer 59

Insured

Question 60

If W relates to a particular loss, what happens when BoW of that W under **_CI(DR)A_**

Answer 60

Need link between BoW + loss (as under IA) **_AND_** consumer aware of the term (ICOBS 8.1.2(3))

Question 61

What part of MIA applies to contribution

Answer 61

80 MIA

Question 62

BoW = what

Answer 62

Discharged or suspended CoI

Question 63

Two ways of impliedly waiving BoW

Answer 63

Accepting premiums or claims handling

Question 64

What part of IA applies to CPs

Answer 64

11 IA

Question 65

Can Ws be created impliedly in any case?

Answer 65

No - only in marine

Question 66

Who runs a claim before insurer entitled to subrogation

Answer 66

Insured

Question 67

What are some examples of when the insured cannot bring a claim, so no subrogation permitted

Answer 67

Limitation period, immunity under policy (i.e. policy does not allow subrogation), insured doesn't exist

Question 68

Two kinds of CPs

Answer 68

CP as to risk and as to liability

Question 69

What is a rateable proportion clause

Answer 69

Requiring insured to claim from each insurer - each insurer only contributes ***rateably***

Question 70

What does average mean in marine insurance

Answer 70

Loss - particular is partial, and general is when asset insured by one scarified to save assets insured by others

Question 71

De Hahn v Hartley ratio

Answer 71

CoI did not exist until W literally complied with

Question 72

What is CP to risk

Answer 72

Insured must do X before insurer goes on risk

Question 73

After subrogation, insured can keep any sum above amount paid to them by the insurer - case

Answer 73

Yorkshire v Nisbet

Question 74

What might a CoI have in it to avoid contribution

Answer 74

Escape, rateable proportion or excess clause

Question 75

What is an example of when the other party **_is_** the insured so no subrogation allowed

Answer 75

1 owner of 2 assets that caused loss, e.g. boats colliding

Question 76

Sum for working out average

Answer 76

(Sum insured / value of property) x loss = claims payment

Question 77

Where defined Ws pre-IA

Answer 77

33(1) MIA

Question 78

If one insurer has RP clause, and other escape + excess clause, RP clause triggered (and exhausted) first - WHAT CASE?

Answer 78

NFU v HSBC

Question 79

Who gets paid third under Lord Napier

Answer 79

Insured for the excess paid

Question 80

Who gets paid first under Lord Napier

Answer 80

Insured for amount they insured themselves

Question 81

What is an excess clause

Answer 81

Turns insurance into excess policy - only responds once other policy exhausted

Question 82

NFU v HSBC ratio

Answer 82

If one insurer has RP, and other escape + excess, RP clause triggered (and exhausted) first

Question 83

What condition of subrogation is usually excluded under CoI

Answer 83

Need to pay insured in full before rights can be exercised

Question 84

Castellain v Preston laid down what principle

Answer 84

Insured should not make a profit from CoI

Question 85

If insured decides to claim from culpable 3rd after being indemnified, what losses should insured include

Answer 85

Both insured and its own uninsured losses

Question 86

If W relates to a particular loss, what happens when BoW of that W under IA

Answer 86

Must be link between breach + loss actually suffered to rely (11)