Chapter 3 Flashcards
What is contra proferentum?
Ambiguous contract terms interpreted against a party that drew it up
What is an operative clause?
Known as insuring clause and in the policy documents it’s where the actual cover provided is outlined
What is a condition?
Contractual terms that insured agrees to comply with
Express or implied
What is an express condition?
Stated in the policy
What is an implied condition?
By common law / practice and doesn’t need to appear in the policy
What does the policy schedule do?
Makes the policy specific to the insured
What is a general exclusion?
Apply to all sections of the policy and allow insurer to deny cover
What is a specific exclusion?
Apply to particular parts of the policy
What is a market / standard exclusion?
Common to all general insurance
Exclusion - War and related perils
Considered a fundamental risk and Gov is responsible
Marine and aviation may be extended to include
Exclusion - Radioactive contamination and explosive nuclear assemblies
Fundamental risk, potential losses beyond capacity of individual insurers, covered by market pools
Exclusion - Terrorism
Gov through Pool Re provide top up cover, premium rates decided by individual insurers, Pool Re is reinsurer
NI - compensation provided by Gov
Exclusion - Pollution and contamination
Property - covered if results from insured peril
Public Liability - covers from unexpected, identifiable event not gradually operating cause
Exclusion - Cyber risks
Specialist but limited buy back cover
Exclusion - Marine policies
Property - exclude material damage covered by marine policy but if insufficient will respond
Exclusion - Contractual liability
Excludes liability for claims arising from agreement entered by insured which extend responsibilities beyond common law
Exclusion - Sonic bang
Damage from pressure waves from aircraft travelling at super sonic speeds
Condition - Reasonable precuations
Formalises insured duty to take reasonable care to minimise loss or damaged
NOT viewed positively by courts and seen as ‘catch all’
Condition - Contribution
Other polices in place covering same loss - modifies principle by limiting insurer’s liability to their share
Condition - Subrogation
Modifies common law principle so insurer can exercise subrogation rights before payment
Condition - Average
Property - reducing claims payments in proportion to underinsurance
Value insured under policy / value at risk x loss
Calculated before apply excess
What is an excess?
First amount of each and every claim the insured is responsible for
Compulsory and voluntary
What is a deductible?
Very large excess eg £50,000
What is a franchise?
Fixed amount or period that acts as a threshold to determine whether claims are payable
What is a warranty?
Promises made by insured relating to facts or performance of the risk:
- something will / will not be done
- certain facts exist / don’t exist
Implied or express
What is a continuing warranty?
State of affairs continue to exist or continue to do something
What is the impact of CIDRA 2012 on warranties?
Ability to rely on a breach of warranty is restricted
What is the impact of IA 2015 on warranties?
Breach of warranty is suspensive and discharges insurer from liability from the date of the breach
Insured repairs breach then liability returns
What is a condition?
Terms that impose important obligations on the insured
What happens if a condition is breached?
Very serious but impact depends on what category the condition falls into
What is the effect of condition precedent to the contract being breached?
Must be fulfilled prior to entering contract - raises doubts to entire contact
What is the effect of breaching a condition precedent to liability?
Must be complied with for valid claim - may avoid liability for that loss
What is the impact of IA 2015 on breaching conditions?
It is suspensive
What is a representation?
Written or oral statement made during negotiations
Historically converted into warranties using ‘basis of contract’ clause
What impact did CIDRA 2012 and IA 2015 have on ‘basis of contract’ clauses?
Abolished them
