chapter 8 - C Flashcards
What is the purpose of a MRC in the London Market?
To present the risk to the underwriter and serve as evidence of insurance for the insured
MRC stands for Market Reform Contract.
What does a policy document typically include for insurance written outside the subscription market?
A booklet with standard wording and a schedule outlining key aspects of the risk
The schedule includes details like name, address, policy period, and key exclusions.
What is the heading in an insurance policy?
The name of the insurer
Outside the London Market, this may represent just one company.
What is the purpose of the recital in an insurance policy?
To state that the insurer and insured are entering into a contract in exchange for a premium
The parties are not specifically identified in this section.
What are operative clauses in an insurance policy?
The key element that sets out what is covered under the policy
What are exceptions in insurance policies?
Risks that are not covered, often including general exclusions applicable to all policies
Examples include war or radioactive risks.
What are the two types of conditions in insurance policies?
- Condition precedent to contract
- Condition precedent to liability
What is a condition precedent to contract?
A requirement that must be satisfied for the insurance contract to be valid
An example is having an insurable interest at the point of purchase.
What does a breach of a condition precedent to liability allow the insurer to do?
Refuse the claim while keeping the policy in force
True or False: A condition must be explicitly stated to be a condition precedent to liability for the court to interpret it as one.
False
Courts interpret terms based on their intention and effect, not just their labels.
What are exclusions in an insurance policy?
Risks that the insurer will not cover under the policy
What is an example of a market exclusion?
Radioactive contamination
What are warranties in the context of insurance?
Promises made by the insured regarding facts or performance concerning the risk
What happens if a warranty is breached?
It carries heavy penalties, potentially voiding the coverage
Breaches can lead to insurer refusal to pay claims.
What does the FSA state about insurers refusing claims due to breach of warranty?
Insurers cannot refuse claims unless the breach is connected to the claim
The only exception is in cases of fraud.
What is the effect of a breach of warranty under the Insurance Act 2015?
The policy is suspended until the breach is remedied
The insurer has no liability for losses during the suspension.
What is the burden of proof regarding breach of warranty and loss under the Insurance Act?
The burden is on the insured to show that the breach did not contribute to the loss
What are basis of contract clauses?
Clauses that convert representations made at placement into warranties, now restricted by the Insurance Act 2015
What are some sources of insurance wording and clauses?
- LSW – London Standard Wording
- ISO – International Standards Organisation
- LMA – Lloyd’s Market Association
- NMA – Non-Marine Association
- AVN – Aviation Market
How do London Market insurers use other markets’ policy forms?
They may adopt another market’s wordings for risks that have been led by that market
What does LPO 348 stipulate in its provisions?
It applies the same warranties, terms, and conditions as those of the Primary Insurers
What are implied warranties in marine insurance?
Warranties that do not need to be written into the policy but apply if the policy is subject to English law
