Law of Insurance Warranties, The
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APPENDIX 3
Insurance Act 2015 sections 9, 10, 11, 16 and 17
Section 9 Warranties and representations
- (1) This section applies to representations made by the insured in connection with –
- (a) a proposed non-consumer insurance contract, or
- (b) a proposed variation to a non-consumer insurance contract.
- (2) Such a representation is not capable of being converted into a warranty by means of any provision of the non-consumer insurance contract (or of the terms of the variation), or of any other contract (and whether by declaring the representation to form the basis of the contract or otherwise).
Section 10 Breach of warranty
- (1) Any rule of law that breach of a warranty (express or implied) in a contract of insurance results in the discharge of the insurer’s liability under the contract is abolished.
- (2) An insurer has no liability under a contract of insurance in respect of any loss occurring, or attributable to something happening, after a warranty (express or implied) in the contract has been breached but before the breach has been remedied.
- (3) But subsection (2) does not apply if –
- (a) because of a change of circumstances, the warranty ceases to be applicable to the circumstances of the contract,
- (b) compliance with the warranty is rendered unlawful by any subsequent law, or
- (c) the insurer waives the breach of warranty.
- (4) Subsection (2) does not affect the liability of the insurer in respect of losses occurring, or attributable to something happening –
- (a) before the breach of warranty, or
- (b) if the breach can be remedied, after it has been remedied.
- (5) For the purposes of this section, a breach of warranty is to be taken as remedied –
- (a) in a case falling within subsection (6), if the risk to which the warranty relates later becomes essentially the same as that originally contemplated by the parties,
- (b) in any other case, if the insured ceases to be in breach of the warranty.
- (6) A case falls within this subsection if –
- (a) the warranty in question requires that by an ascertainable time something is to be done (or not done), or a condition is to be fulfilled, or something is (or is not) to be the case, and
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(b) that requirement is not complied with.Page 246
- (7) In the Marine Insurance Act 1906 –
- (a) in section 33 (nature of warranty), in subsection (3), the second sentence is omitted,
- (b) section 34 (when breach of warranty excused) is omitted.
Section 11 Terms not relevant to the actual loss
- (1) This section applies to a term (express or implied) of a contract of insurance, other than a term defining the risk as a whole, if compliance with it would tend to reduce the risk of one or more of the following –
- (a) loss of a particular kind,
- (b) loss at a particular location,
- (c) loss at a particular time.
- (2) If a loss occurs, and the term has not been complied with, the insurer may not rely on the non-compliance to exclude, limit or discharge its liability under the contract for the loss if the insured satisfies subsection (3).
- (3) The insured satisfies this subsection if it shows that the non-compliance with the term could not have increased the risk of the loss which actually occurred in the circumstances in which it occurred.
- (4) This section may apply in addition to section 10.
Section 16 Contracting out: non-consumer insurance contracts
- (1) A term of a non-consumer insurance contract, or of any other contract, which would put the insured in a worse position as respects representations to which section 9 applies than the insured would be in by virtue of that section is to that extent of no effect.
- (2) A term of a non-consumer insurance contract, or of any other contract, which would put the insured in a worse position as respects any of the other matters provided for in Part 2, 3 or 4 of this Act than the insured would be in by virtue of the provisions of those Parts (so far as relating to non-consumer insurance contracts) is to that extent of no effect, unless the requirements of section 17 have been satisfied in relation to the term.
- (3) In this section references to a contract include a variation
- (4) This section does not apply in relation to a contract for the settlement of a claim arising under a non-consumer insurance contract.
Section 17 The transparency requirements
- (1) In this section, ‘the disadvantageous term’ means such a term as is mentioned in section 16(2).
- (2) The insurer must take sufficient steps to draw the disadvantageous term to the insured’s attention before the contract is entered into or the variation agreed.
- (3) The disadvantageous term must be clear and unambiguous as to its effect.
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(4) In determining whether the requirements of subsections (2) and (3) have been met, the characteristics of insured persons of the kind in question and the circumstances of the transaction are to be taken into account.Page 247
- (5) The insured may not rely on any failure on the part of the insurer to meet the requirements of subsection (2), if the insured (or its agent) had actual knowledge of the disadvantageous term when the contract was entered into or the variation agreed.