Insurance Law
Legal foundations
Non-life insurance sits on the general law of contract plus specific insurance statutes and case law. Candidates must understand offer and acceptance, consideration, intention to create legal relations, and the duty of fair presentation of risk. Under modern UK-style regimes, the insured must disclose every material circumstance they know or ought to know, and the insurer must ask clear questions. Remedies for breach are proportionate: the insurer may avoid the policy for deliberate or reckless non-disclosure, but for innocent or negligent breaches the remedy is scaled to what the insurer would have done had it known the truth.
Key doctrines
- Utmost good faith - a mutual duty, not a one-way one.
- Warranties - promissory conditions; breach discharges the insurer's liability for losses arising after breach, subject to statutory protections.
- Conditions precedent - obligations the insured must satisfy before recovery (e.g. notifying claims promptly).
- Utmost good faith and misrepresentation - statements of fact must be substantially true; statements of opinion need only be honestly held.
Traps in questions
- Confusing a warranty with a representation: warranties are terms of the contract, representations are pre-contract statements.
- Forgetting that a condition precedent to liability suspends cover, whereas a condition subsequent may allow the insurer to repudiate.
- Assuming breach of warranty automatically voids the policy from inception - it does not under modern law.
Worked example
An insured fails to disclose that a warehouse stores flammable solvents. The insurer would have charged 40% more. Under a proportionate remedy, the claim is reduced by the additional premium that would have been charged - the insurer cannot simply avoid the policy for a negligent breach.