Insurance Law
Formation and terms
Understand offer, acceptance, consideration and intention to create legal relations in the context of insurance contracts. Know the roles of the proposal form, policy schedule, wording, endorsements and warranties. Distinguish conditions precedent, conditions subsequent and mere conditions, and the consequences of breach.
Key doctrines
Utmost good faith and the duty of fair presentation of risk (as under modern insurance law reform) require disclosure of material circumstances and avoidance of misrepresentation. Know the remedies for breach: avoidance, proportionate remedy, or terms. Understand insurable interest, privity, assignment, and the effect of the Insurance Act reforms on fraudulent claims and late payment.
Traps
Examiners test whether a warranty is a condition precedent to liability or a mere suspensory condition. Another trap is confusing avoidance (ab initio) with cancellation. Understand that a fraudulent claim can allow the insurer to recover claims already paid.
Worked example
An insured fails to disclose a material conviction on a proposal. Under the proportionate remedy regime, the insurer may reduce the claim proportionately rather than avoid the policy where the breach was not deliberate. Rule of thumb: deliberate or reckless breach permits avoidance; innocent or negligent breach usually leads to proportionate remedy.