Chapter 7 - Conditions Flashcards
What is the name for conditions that need to be fulfilled prior to the formation of the contract itself?
Conditions precedent to the contract
What is a conditions precedent to contratct?
Conditions that must be fulfilled prior to the formation of the contract itself.
What happens if you dont comply with a condition precedent to contract?
There is doubt as to the validity of the who contact and then the policy is either void, or the insurer has the option whether or not to make it invalid.
If there is no insurable interest what does this mean for the insurance policy?
The condition precent to contact as not been complied with and therefore there can be no efficive insurance policy and the policy is void.
What is the difference between a void contact and a voidable contact?
Void is a contact that is automatically invalid.
Voidable is one that an insurer can choose whether or not to make it invalid.
What could make an insurance policy void?
An illegal contact
No insurable interest
A fundamental mistake
If a policy is void what would this essentially mean?
It is treated as if it never existed.
If a policyholder has deliberately misstated something, where does this leave the insurer?
They have not complied with the condition precedent to contact and the insurer has the option to avoid the policy, but may choose not to.
What does the continuing conditions precedent mean?
These are conditions that are present throughout the policy term and the policyholder need to remain compliant to them.
What is the alteration condition?
The insured must notify the insurer of any alternation to the risk through out the policy term.
If there is a breach to the alteration condition and subsequently a claim, what does this mean for both the insured and insurer?
Insurer - due to the continuing condition precedent not being complied with the insurer can choose to avoid the whole contract from the date of the breach provided there is a casual connection between the breach and the loss.
Policyholder - breaking this condition could result in invalid insurance and a claim not being paid.
How serious is a conditions precedent to liability?
Very - if these are not complied with then any claim is invalid.
Insurers may avoid liability for a loss but they cannot cancel a policy.
If a condition precedent to liability (or to recovery) is not observed, what can insurers do?
insurers may avoid liability for a particular loss, but they may not repudiate the contract as a whole.
If a subsequent loss occurs, the insurers must pay, provided that the insured complies with the condition in this instance.
The FCA conditions regarding breaching a policy condition is applied to both consumers and commercial policy holders?
Only applicable to consumers
Often insurers will apply them to some commercial policies such as commercial combined/packaged policies.
During the course of negotiating an insurance contract, statements are made by a proposer that may influence an insurer on deciding whether to enter into the contract, or to enter into it on particular terms. What are these called?
Representations
If a misrepresentation applies to a material fact, what can the insurer do?
Avoid the policy ab initio
Must Warranties be complied with?
Strictly
What happens if you breach a warranty?
Suspended cover and a claim may not be paid if it related to it
Some conditions allow the insurer to void the policy if breached? Name one
no insurable interest
Conditions precedent to the contact such as misstatment entitle the insurer to do what?
Avoid the policy at its option
A breach of a continuing condition precedent entitles insurers to what?
Avoid the whole contract from the date of the breach, provided it is linked to the loss.
A breach of a condition precedent to liability entitles insurers to what?
Avoid that particular claim but not the whole policy
Conditions precedent to the contract are what?
Conditions that must be fulfilled prior to the policy commencing
Continuing conditions precent are what?
Ongoing throughout the policy
Conditions precedent to liability are what?
Conditions that must be complied with for a valid claim.
