General Principles of Insurance Law

I.

INTRODUCTION

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2.

6.

Definition of insurance
The parties to the contract
The Insured
The Insurers
Insurance Companies
Underwriters
Classification of contracts of insurance
According to the nature of the event
According to the nature of the interest affected
According to the nature of the insurance
The nature of the contract of insurance
The subject-matter of the contract of insurance
The subject-matter of insurance
A physical object
A chose-in-action
A liability imposed upon the assured
The description of subject-matter
To identify the subject-matter
The kinds of description
Specific descriptions
Description of the locality of the subject-matter
Description of other circumstances
To show the nature of the risk
To define the risk
Insurable interest
What constitutes an insurable interest
The necessity for an insurable interest
Description of interest
The general rule
Express condition
Prospective profits and consequential loss
Precarious nature of the interest
The time for insurable interest
Interest at the time of the loss sometimes essential
Retrospective insurance
The Insurance Companies Act 1982

II.

THE MAKING OF THE CONTRACT

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8.

Introduction
The offer

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5.

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12.

What constitutes an offer

By whom the offer is made
The proposal form
The usual contents of proposal forms
Description of proposed assured
Description of the risk
Description of circumstances affecting the risk
Previous history of the proposed assured
The questions asked in various types of insurance
Life insurance
Personal accident insurance
Fire insurance
Burglary insurance
Motor insurance
The effect of the proposal form
Statement by B.I.A. and Lloyds
Statement of Life Offices Association
The cover note
The purpose of the cover note
The form of the cover note and its issue
The duration of the cover note
The effect of the cover note
The incorporation of the terms of the policy
Replacement of the cover note by a policy
Brokers cover note
The acceptance
What constitutes an acceptance
The methods of acceptance
Where the offer is made by the proposer
Where the offer is made by the insurers
The effect of acceptance
Discrimination
The principle of good faith
Non-disclosure
The extent of the assureds duty
Actual knowledge
Presumed knowledge
Is the duty of disclosure an implied term?
Te tests of materiality
The test of the prudent insurer
The reasonable assured test
Whether the non-disclosure would influence the particular insurer is irrelevant
Assureds opinion as to whether the fact is material is irrelevant
Fifth Report of Law Reform Committee
Law commissions proposal
Materiality is a question of fact
The time when materiality is to be judged
The classification of material facts
Facts normally material
Facts not normally material
Facts which need not be disclosed

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14.

III.
15.
16.

Facts within actual or presumed knowledge of insurer

Facts within constructive knowledge of insurer
Facts as to which information is waived
Facts tending to lessen the risk
Facts the disclosure of which is unnecessary by reason of a condition
Facts relating to spent convictions
Some examples of material and immaterial facts
Fire insurance
Burglary insurance
Personal accident insurance
Guarantee insurance
Life insurance
Motor insurance
Proof of the materiality of facts not disclosed
The duration of the duty of disclosure
The effect of non-disclosure
Misrepresentation
Modification of the duty by contract
Question and answers
The effect of the questions
The effect of the answers
Where there is a basis clause
Where there is no basis clause
The types of inaccuracy
The interpretation of the questions and answers
The statement must be considered as a whole
A fair and reasonable construction must be adopted
The whole truth must be told
Other information in the possession of the insurers
Inconsistent or unsatisfactory answers
Where the space for the answer is left blank
The onus of proof
What must be proved
Some examples of the evidence required
The premium
The amount of the premium
The payment of the premium
Mode of payment
Time for payment
Effect of payment
Payment to the agent of the insurers
The authority to receive payment
The form of payment
Right to claim a return of premium
Right to a return of part of the premium
Where there is no right to a return of premium
THE POLICY
Introduction
Classification of policies

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20.

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24.

According to the description of the subject-matter

According to the amount recoverable
Unvalued policies
Valued policies
The form and contents of the policy
Insurance companies policies
The contents of the policy
The heading
The body of the policy
The back of the policy
The docket
Lloyds policies
The form of the policy
The contents of the policy
The premium
The liability of the underwriters
Conditions
The incorporation of other policies
The effect of other documents on the policy
Effect where the other document is not incorporated
Effect where the other document is incorporated
Looking at other documents to resolve ambiguities
Parol evidence in relation to the policy
The general rule
Exceptions to the general rule
To prove that the policy is void
To prove that the policy does not contain the correct terms
To prove a parol condition
To add collateral terms
To identify the subject-matter of insurance
To show that a word is used in a peculiar sense
The effect of the admission of parol evidence
The commencement and duration of the policy
The commencement of the policy
The duration of the policy
Determination by payment
Determination by consent
Determination by assured
Determination by statue
Determination by breach of condition
The cancellation of the policy
The alteration of the policy
Methods of alteration
The right of the insurer to avoid the contract
The rectification of the policy
Effect of delivery of policy containing wrong terms
The advisability of rectification
The methods of rectification
By the act of the parties
By an order of the court
The renewal of the policy

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30.

Stipulations as to renewal
Where the policy is renewable by mutual consent
Where the policy is renewable at the option of the assured
Where both parties must renew the policy in the absence of notice
The practice as to renewal
Statement by B.I.A. and Lloyds
The effect of renewal
The situations to be considered
Some express terms as to whether renewal is as new contract
Days of grace
The classes of stipulation
Lapse and revival of policy
The perils insured against in the policy
The exceptions in the policy
The variety of exceptions used
The exceptions to be found in most types of policy
The construction of exceptions
The conduct of the assured
Negligent acts
Willful acts
Express stipulations in the policy
The conditions of the policy
The classification of conditions
Implied and express conditions
Express conditions
Classification of conditions with reference to time of operation
Conditions precedent to validity of the policy
Conditions subsequent of the policy
Conditions precedent to the liability of the insurers
What constitutes a condition
Whether personal fulfillment of the condition by the assured is necessary
Breach of condition
What constitutes a breach
Burden of proving a breach
The effect of a breach
The usual effect
Where a particular penalty is provided
Waiver of breach of condition
Waiver by the insurers: what constitutes a waiver
Waiver of breach already committed
Waiver of future performance of condition
Waiver must be pleaded
Waiver by agent of insurers
Statement by B.I.A. and Lloyds
The alteration of the risk under the policy
The effect of an alteration
Where the policy ceases to apply
Where the alteration merely suspends the operation of the policy
Implied conditions as to making alterations
Where the policy contains an express condition against alterations
Where there is no express condition against alterations

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34.

Express conditions as to making alterations

The types of prohibition or restriction
Conditions prohibiting alterations absolutely
Conditions prohibiting increase or risk
Conditions prohibiting alterations without notice
Conditions prohibiting increase of risk without sanction
The assignment of the subject-matter insured under the policy
Express conditions against assignment
Assignment by operation of law
Sale or gift of subject-matter
Creation of a trust mortgage
Change in a partnership
Other insurance
Express conditions relating to other insurance
What constitutes other insurance
The assignment of the policy
What constitutes a valid assignment
Consent of the insurers
Contemporaneity of assignment of the policy and the subject-matter
The form of the assignment
Assignment by operation of law
The effect of the assignment of the policy
The construction of the policy
Construction and the doctrine of precedent
The principal rules of construction
The intention of the parties must prevail
The whole of the policy must be looked at
The written words will be given more effect than the printed words
The grammatical construction will be adopted
The words are to be construed in their ordinary meaning
The meaning may be limited by the context
The words mean what they say
The words must be construed liberally
A reasonable construction will be preferred
The contra proferentem rule
The court will try to reconcile the inconsistencies
Express terms override implied terms
Subsequent ascertainment of matters originally uncertain
The size of print in insurance policies
THE CLAIM

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Introduction
The time of the loss
No express terms
Express terms
The doctrine of proximate cause
The meaning of proximate cause
Was the loss caused by a peril insured against?
Where the last cause is the peril insured against
Where the peril insured against is not the last cause

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39.

Where there is no break in the sequence of causes

Where the sequence of causes is interrupted
Where the causes are concurrent
Was the loss caused by an excepted cause?
Where the peril insured against is preceded by an excepted cause
Where the peril insured against precedes an excepted cause
Where the loss is caused by the action of two concurrent and independent causes
Modification or exclusion of the doctrine of proximate cause
The making of a claim
Notice of loss
The notice need not be in writing
The notice need not be given by the assured himself
The notice need not be given to the insurers personally
The notice should be given within the prescribed time
Particulars of loss
Delivery of the particulars of the loss
Sufficient details must be given
The particulars of the loss
Sufficient details must be given
The particulars should be delivered within the prescribed time
The methods of proving the loss
Fraudulent claims
The Insurance Ombudsman Bureau
Burden of proof
Proof of loss
On whom the burden lies
Degree of proof required
Proof that the loss falls within an exception
On whom the burden lies
The general rule
Modification by the terms of the policy
Degree of proof required
Where the undertaking of the insurer is qualified
The principles to be applied
Promise with an exception
Qualified promise
THE SETTLEMENT OF THE CLAIM

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41.

Introduction
Payment of the loss
The calculation of the amount recoverable
Valued policies
Unvalued policies
Successive losses
Simultaneous losses
Limitation on the amount recoverable
Contribution clause
Average clause
Excess clause
Clause specifying smaller sum payable

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45.

Limitation by statute
Franchise clauses
To whom payment is to be made
The form of payment
The payment of interest
Payment by mistake
Mistake of law
Mistake of fact
Some examples of mistakes of fact
Exceptions to the general rule
Ex gratia payments
The application of the proceeds of the policy
The general rule
Exceptions to the general rule
Right conferred by statute
Contract for the sale or exchange of property
Mortgage by deed
Property subject to a trust or settlement
Right conferred by contract
The assignment of the proceeds of the policy
Where the loss has already taken place
Where the loss has not yet taken place
The form of the assignment
Reinstatement
Reinstatement by the insurers
Reinstatement clause
Time within which election is to be made
The mode of election
The effect of the election
The duties of the assured
Reinstatement under the Fires Prevention (Metropolis) Act 1774
Reinstatement by assured
Duty imposed by contract
Duty imposed by statute
Subrogation
The nature of subrogation
The types of policies to which subrogation applies
The history of the doctrine
The principle of indemnity
When subrogation arises
The rights in respect of which subrogation arises
Rights arising out of tort
Rights arising out of contract
Rights under statue
Rights over the subject-matter
The exercise of the right of subrogation
The duties of the assured
Duty to give assistance to the insurers
Duty not to prejudice the insurers position
The defences available to the party sued
The effect of subrogation

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47.

Indemnification aliunde
Indemnification before payment
Indemnification after payment
The insurers right to benefit
The cases in which the right arises
Where the payment is made by a tortfeasor
Where the payment is made under a contract
Where the payment is made as a gift
Contribution
The meaning of contribution
When the right of contribution arises
Same subject-matter
Same peril
Same assured
Policies in force
Valid and effective contracts
Contribution not excluded by terms of policies
The enforcement of the right of contribution
The apportionment of the loss
Specific policies
Where the policies are concurrent
Where the policies are non-concurrent
Where the loss affects the common property not covered by both policies
Average policies
The two conditions of average
The application of the two average conditions
The apportionment of the loss
AGENCY IN INSURANCE TRANSACTIONS

48.
49.

50.

Introduction
The relationship between the principal and the agent
The rights of the agent
Commission
Indemnity
Lien
The duties of the agent
Duty to carry out the transaction
Duty to obey his instructions
Duty to use proper skill
Duty to account
Duty to act honestly
The consequences of a breach of duty
Forfeiture of all his rights
Liability for all loss sustained
Dismissal
Criminal liability
The relation between the principal and third parties
The authority of the agent
The types of authority
Express and implied authority

Usual authority
Apparent authority
The termination of the agents authority
Where the act of the agent
51. The relation between the principal and third parties
The authority of the agent
The types of authority
Express and implied authority
Usual authority
Apparent authority
The termination of the agents authority
Where the act of the agent does not bind the principal
The effect of the agents fraud
Ratification
Conditions necessary for a valid ratification
The effect of ratification
Ratification after loss
Marine insurance
Non-marine insurance
Insurances by persons interested
Insurances by persons having no interest
Where the policy covers persons other than the assured
Knowledge of the principal or of the agent
Imputed knowledge in general
Principals knowledge imputed to agent
Agents knowledge imputed to principal
Imputed knowledge in insurance transactions
In relation to the assured and his agent
Duty of disclosure
Knowledge at other stages of the insurance
In relation to the insurers and their agent
Duty of disclosure
Where the proposal form in filled in by the agent and third parties
52. The relationship between the agent and third parties
Rights and liabilities under the contract
Where he acts for a named or unnamed principal
Where he acts for an undisclosed principal
Liability for breach of warranty of authority
Liability in tort
MISCELLANEOUS
53. Conflict of laws

The jurisdiction of the English courts

The proper law of the contract
Where there is an express provision in the policy
Where there is no provision in the contract
The presumptions
The place where the contract is made
Contracts made through agents
The place of payment
The form in which the policy is framed
Terms valid in one country only
Immateriality of locality of subject-matter
When the law of England must always be applied
Assignment
54. The effect of war upon the contract
55. The protection of policy holders
The Policyholders Protection Board
Constitution
Appointment and tenure of members
Remuneration and compensation
Powers and procedure
Performance of functions
Instruments and contracts
Accounts, audit and annual report
Guidance by the Secretary of State
The general scope of the Boards function
The Boards duties in case of companies in liquidation
Compulsory insurance
Third-party risk against insurance companies in road traffic cases
General policies other than insurance policies
Limits on the Boards duties
Long term policies
Future benefits under long term business
Disproportionate benefits under long term policies
General provisions with respect to Boards duties
Performance of duties
Exclusion and modification of Boards duties
The Boards powers to assist policyholders of companies in liquidation
The Boards powers to protect policyholders of companies in financial difficulties
Transfer of business etc.
Long term business
Levies on intermediaries
Accountable intermediary
Income liable to levy
Exempt income levy

Restriction on the imposition of the levy

Rate of the levy
Statement for the purposes of s 20
Declaration and enforcement of the levy
Distribution of excess proceeds of levy
Levies on authorized insurance companies
Net premium income
Application of proceeds
Restriction on the imposition of the levies
Statements of premium income
Declaration and enforcement of levies
Miscellaneous
Provisions for persons insured under contracts of insurance and evidenced by
policies
Application of general receipts by the Board
Application of surplus funds by the Board
Oversea companies
Disclosure of documents and information to the Board
Statement by the Secretary of State in respect of the exercise of his powers
Report by Secretary of State with to the operation of the Act
Regulations