Warranties

Question 1

What is a warranty

Answer 1

Warranty is like a promise made by the insured to the insurer, which must be strictly complied with. Old law was really strict - Insurer was automatically discharged from liability at that point.

DE Hahn v Hartley - 50 hand or upwards, but only 46 did and breach of warranty occurred.

Question 2

Why have them?

Answer 2

Intended to define and thereby limit the risk that the insurer must face for the duration of the insurance policy.

Question 3

Types of warranties

Answer 3

Past or present fact - has been done/is being done
Future - will/won’t be done
Opinion - Fact is or will be true, best of the insured’s knowledge or belief

Question 4

Create warranty

Answer 4

Must be incorporated as a term of the insurance contract.

Question 5

Unipac Ltd v Aegon Insurance Co

Answer 5

Lied about how long had been on premises

Question 6

Judicial Interpretation of Warranties

Answer 6

Strict and if possible will make sure that it does not help those who are relying on warranty. If properly created then it will be fine.

Law Commission - 4 key problems:

1) Insurer may refuse claim trivial mistake
2) Insured cannot use the defence

Question 7

Reform Prospals

Answer 7

Breach of warrant should suspend the insurer’s liability for the duration of the breach but a remedy of the breach