Chapter 3

Question 1

What is contra proferentum?

Answer 1

Ambiguous contract terms interpreted against a party that drew it up

Question 2

What is an operative clause?

Answer 2

Known as insuring clause and in the policy documents it’s where the actual cover provided is outlined

Question 3

What is a condition?

Answer 3

Contractual terms that insured agrees to comply with
Express or implied

Question 4

What is an express condition?

Answer 4

Stated in the policy

Question 5

What is an implied condition?

Answer 5

By common law / practice and doesn’t need to appear in the policy

Question 6

What does the policy schedule do?

Answer 6

Makes the policy specific to the insured

Question 7

What is a general exclusion?

Answer 7

Apply to all sections of the policy and allow insurer to deny cover

Question 8

What is a specific exclusion?

Answer 8

Apply to particular parts of the policy

Question 9

What is a market / standard exclusion?

Answer 9

Common to all general insurance

Question 10

Exclusion - War and related perils

Answer 10

Considered a fundamental risk and Gov is responsible
Marine and aviation may be extended to include

Question 11

Exclusion - Radioactive contamination and explosive nuclear assemblies

Answer 11

Fundamental risk, potential losses beyond capacity of individual insurers, covered by market pools

Question 12

Exclusion - Terrorism

Answer 12

Gov through Pool Re provide top up cover, premium rates decided by individual insurers, Pool Re is reinsurer
NI - compensation provided by Gov

Question 13

Exclusion - Pollution and contamination

Answer 13

Property - covered if results from insured peril
Public Liability - covers from unexpected, identifiable event not gradually operating cause

Question 14

Exclusion - Cyber risks

Answer 14

Specialist but limited buy back cover

Question 15

Exclusion - Marine policies

Answer 15

Property - exclude material damage covered by marine policy but if insufficient will respond

Question 16

Exclusion - Contractual liability

Answer 16

Excludes liability for claims arising from agreement entered by insured which extend responsibilities beyond common law

Question 17

Exclusion - Sonic bang

Answer 17

Damage from pressure waves from aircraft travelling at super sonic speeds

Question 18

Condition - Reasonable precuations

Answer 18

Formalises insured duty to take reasonable care to minimise loss or damaged
NOT viewed positively by courts and seen as ‘catch all’

Question 19

Condition - Contribution

Answer 19

Other polices in place covering same loss - modifies principle by limiting insurer’s liability to their share

Question 20

Condition - Subrogation

Answer 20

Modifies common law principle so insurer can exercise subrogation rights before payment

Question 21

Condition - Average

Answer 21

Property - reducing claims payments in proportion to underinsurance
Value insured under policy / value at risk x loss
Calculated before apply excess

Question 22

What is an excess?

Answer 22

First amount of each and every claim the insured is responsible for
Compulsory and voluntary

Question 23

What is a deductible?

Answer 23

Very large excess eg £50,000

Question 24

What is a franchise?

Answer 24

Fixed amount or period that acts as a threshold to determine whether claims are payable

Question 25

What is a warranty?

Answer 25

Promises made by insured relating to facts or performance of the risk: - something will / will not be done - certain facts exist / don't exist Implied or express

Question 26

What is a continuing warranty?

Answer 26

State of affairs continue to exist or continue to do something

Question 27

What is the impact of CIDRA 2012 on warranties?

Answer 27

Ability to rely on a breach of warranty is restricted

Question 28

What is the impact of IA 2015 on warranties?

Answer 28

Breach of warranty is suspensive and discharges insurer from liability from the date of the breach Insured repairs breach then liability returns

Question 29

What is a condition?

Answer 29

Terms that impose important obligations on the insured

Question 30

What happens if a condition is breached?

Answer 30

Very serious but impact depends on what category the condition falls into

Question 31

What is the effect of condition precedent to the contract being breached?

Answer 31

Must be fulfilled prior to entering contract - raises doubts to entire contact

Question 32

What is the effect of breaching a condition precedent to liability?

Answer 32

Must be complied with for valid claim - may avoid liability for that loss

Question 33

What is the impact of IA 2015 on breaching conditions?

Answer 33

It is suspensive

Question 34

What is a representation?

Answer 34

Written or oral statement made during negotiations Historically converted into warranties using 'basis of contract' clause

Question 35

What impact did CIDRA 2012 and IA 2015 have on 'basis of contract' clauses?

Answer 35

Abolished them