Risk Definition in Insurance Law: Significance and Challenges
NUS - Centre for Maritime Law Working Paper 18/08
32 Pages Posted: 23 Sep 2018
Date Written: September 21, 2018
The traditional common law approach to breach of an insurance contract term had been technical, and had given priority to the form of the relevant term over the effect of the breach in relation to the loss claimed in substance. An attempt to overcome some of the harsh consequences of this technical and strict approach was made by s 11 of the Insurance Act 2015 (UK) (the IA 2015). The wording of s 11, however, is by no means immune from controversies. The starting point of examining the section is to determine whether the relevant insurance contract term defines the risk as a whole. Very limited guidance, however, as to which terms fall within this category is provided by either the IA 2015 or the documents published in the preparatory stages of the Insurance Bill 2014 (UK). The Law Commissions expressly left this matter to be determined by the courts. This paper will seek to clarify the wording of s 11 in terms of ascertaining which terms, when breached, will not instantly provide a pre-determined remedy because of their form, but will rather require an investigation of the substantive effect of their breach in relation to the insured’s loss.
Keywords: Risk, risk definition, risk mitigation, insurance, contractual terms, breach, loss, remedies, Insurance Act 2015 (UK)
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