2 Common Insurance Clauses PDF

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Summary

Insurance Law - Common Insurance Clauses...

Description

BOILERPLATE CLAUSES The terms in an insurance contract can be classified in different ways according to their function. A breach of a term by the insured will give the insurer a remedy that varies according to the status of the terms that is broken. Common clause

Definitions

Notes There are some generic definitions but there will be some which differ for each class. Makes contract provisions concise and reduces risk of ambiguity. Defines cover by stating the subject matter and the perils (or events) insured against.

Descriptive of the Risk

In consideration of payment of the premium the insurer will indemnify, or otherwise compensate the insured, against loss, destruction or damage as described in and subject to the conditions and exclusions of this policy or any section of it, occurring or arising in connection with the goods during the period of insurance, or any subsequent period for which the insurer agrees to accept an renewal premium

Exceptions/ exclusions

Define the boundaries of the risk insured. Exclude cover for certain risks and may operate to defeat cover even though there is no causal connection b/ween the relevant circumstances and the loss. If an exception operates to stop cover, the effect on cover is suspensive. An exclusion clause must be read in the context of the contract of insurance as a whole. Must construed in a manner consistent with the purpose of the insurance contract.

Warranties

Circumscribe risk – may be thought of as conditions precedent to cover. s33(1) MIA – warranties are terms by which the policyholder undertakes to do or not to do some particular thing, or that some condition will be fulfilled (‘promissory warranties’). Inc. terms where the Insured “affirms or negatives the existence of a particular state of facts” (‘warranties of past or present fact’). Merely calling a term a ‘warranty’ isn’t enough, courts will consider the intention of the parties. (s33 MIA unamended by IA 2015)

Conditions/ obligations

Conditions precedent to the risk are those that must be fulfilled before the insurer comes on risk. Conditions precedent to liability are those where the insurer is on risk, but the condition precedent must still be adhered to. A bare condition specifies an obligation. It is usually concerned with the insured's conduct during the currency of the policy.

Governing law and jurisdiction

Enables the parties to specify the system of law which will be used to interpret a contract and deal with any disputes which arise under that contract. The law and the jurisdiction don’t have to be the same.

Limits of liability

The maximum amount the insurer will pay out under the policy. It may be different for each type of loss covered. For Employers’ Liability and Public Liability policies, this is a limit for all claims arising out of a single cause, whereas this is normally stated as an aggregate amount payable in any one period of insurance in the case of Products Liability or Financial Loss insurances. In the case of Professional Indemnity insurances’ the Limit of Indemnity may be expressed as one or the other. Employer’s Liability policies must have a minimum indemnity limit of £5,000,000.

Period of insurance

The length of time that the insurance covers

Territorial limits/ geographical area

Where the insurance applies

Excess/ deductible

a.k.a ‘the first amount of any claim’; The first portion of a loss or claim which is borne by the insured. An excess can be either voluntary to obtain premium benefit or imposed for underwriting reasons. Also known as a Deductible. Reduces the risk for the insurer and enables them to offer a reduced premium.

Sum Insured

The maximum amount payable in the event of a claim under contract of insurance. It is your responsibility to ensure the sum insured is adequate whether your policy is written on an Indemnity basis or Reinstatement basis.

Rights to cancel and complaints

Required under Unfair Contracts Terms Act and FCA rules (ICOB 4.1.2).

Claims Handling

All amounts claimed by the Insured under the contract of insurance, issued by the Insurer have in all material respects been paid in accordance with the terms of the contract. Except any claims where the Insurer, in good faith, believes or believed that there is a basis to contest payment.

Claims Notification

Different Insurers will have different conditions on claims reporting, failure to adhere to these could seriously affect your ability to claim. It is therefore essential that you comply with the notification conditions and, our advice is to notify us or your Insurers at the earliest possible opportunity.

Dispute Resolution

Sets out the process by which the parties intend to resolve any disputes which may arise out of their contract.

Data Protection

Sets out Insurer’s right to process data in accordance with the privacy notice...