Insurance

Direct Recourse to Insurer I There is no general right for a person who has suffered damage,  to have direct recourse to an insurance policy which the defendant may have contracted, in order to indemnify himself in relation to liability for such damage.  Legislation in Ireland allows recourse to such a policy, in limited circumstances, where the defendant is insolvent.  This is in contrast to the United Kingdom, where legislation provides a general right of against the defendant’s insurer, in the event of the defendant’s insolvency. The Civil Liability Act provides that where a person whose liability is insured dies, becomes bankrupt or becomes subject to insolvency, monies paid under the policy are to be applied only in discharging insured claims and are not to be available to his creditors generally. Where a claimant has obtained a judgment against an insured who cannot satisfy it for those reasons, he may require that the proceeds of the policy be made available to satisfy the judgment.… Read the rest

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Commencement of Policy An insurer may accept the application by issuing a policy and accepting the premium. Regulatory issues play arise in the formation of the contract and in a consumer context.A cover note may issue as short-term or interim insurance cover.  They are most commonly  found in relation to motor insurance.  They would not be found in relation to certain types of insurance such as life assurance. Practical difficulties may arise in relation to cover notes, in that they do not contain all or many of the  terms of a policy.  They may specify minimal details, such as the risk, the parties and the cover period.  The cover note may refer to and provide that the usual standard terms and conditions of the policy apply. A policy must be renewed on expiry, if cover is not to cease.  The obligation to disclose material matters will arise afresh.  The duty of utmost good faith applies on renewals.… Read the rest

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Insured Risks Insurance insures against loss arising from the insured risk. The loss must flow from the insured risk.  Generally, direct losses only are covered.  Indirect knock-on or financial losses are not generally covered. Insurance usually is available only in respect of risks or uncertain events that would have an adverse effect on the insured.  The risk is usually a future uncertain event, which may or may not occur.  It will not generally cover deliberate acts. The acts will be in the nature of accidents or events, outside the control of the insured. Insurance is traditionally available in respect of some types of risk only. Economically, the insurance market cannot function, unless it can finance the risk concerned by premiums paid for that type of risk by the entire insured population. In practice, the insurance market is limited to certain well-established risks. Insurable Interest An insured must have an interest in the subject matter insured. … Read the rest

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Insurance for Liability Liability insurance indemnifies the insured person against legal liability to third parties.  The liability may be for personal injury, death, damage to or loss of property and financial and economic loss. The law of tort / civil wrongs defines circumstances in which a person may become liable to compensate another. Negligence is the most pervasive tort. It is not usually possible to insure against an intentional or unlawful act of the insured.  Insurance primarily covers liability for unintended acts and accidents, where there is a sufficient degree fault, typically negligence, to make the insured liable in the civil courts for his actions or omission. The wrongful acts of the insured will not usually prevent innocent third parties from obtaining the benefit of the insurance.  This is effectively based on public policy, for the benefit of persons who suffer civil wrongs.  The liability of the insured at law is based in general legal principles. … Read the rest

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Making a Claim The insurance policy will set out the procedure for making a claim. Generally, notice must be given of the claim at an early date.  There may be a requirement that notice be given within a relatively short time.  If the time is unreasonably short, it may be deemed unfair under the Unfair Contract Terms Regulations. It is important that insurances policies are examined quickly after the occurrence of an insured event. The claims should be notified promptly to the insurer. Full details of the loss must usually be given. This may involve a declaration proving that particular loss has incurred. There may be a particular report form, which the insurer requires. Insurance usually covers loss arising directly from an insured risk. So-called “consequential loss”, which arises indirectly from the insured risk, is generally not covered unless specifically covered. The loss must have occurred by reason of the insured risk. … Read the rest

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Mandatory Insurance It is unlawful to use a mechanically propelled vehicle unless it is insured against third-party liability (as a minimum) under an approved policy of insurance.  EU Directives and the Road Traffic Act require motor insurance policies to cover liability for negligence of and the consequences of injury caused by the driver.  The purpose is to protect the accident victim. There are certain minimum mandatory terms which are required in insurance policies. The insurer must cover liability to persons injured or who suffer property damage arising from negligent use of the vehicle. This covers liability to passengers in the vehicle, as well as liability to third-party persons who are injured. There are limitations on certain type of clauses in the policy. It is not possible to exclude cover where driving is by unlicensed drivers or persons, is in breach of condition or without consent.  Insurance cover cannot be terminated before its due date other than, following 10 clear days written notice.… Read the rest

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Duty of Good Faith / Disclosure An insurance company may avoid a contract of insurance on the basis of non-disclosure as if it constituted misrepresentation.  An insurance policy contract is one of utmost good faith. The English courts and Irish courts have diverged slightly in that the Irish courts have taken an approach which is more favourable to the insured. The general principle is that the duty of disclosure requires that all facts be disclosed, which a reasonable insured might reasonably be thought to be material to the risk he is seeking indemnity for. The failure to ask specific questions on the matter claimed to be material, does not constitute usually constitute a waiver, although some cases have so held.  The wording must be such that the proposer is lead to believe that the insurer is only interested in matters specified, for a waiver to apply. At one time, the courts held that the failure to ask an obvious question was not a waiver of information that would have been disclosed. … Read the rest

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Warranties Under general law,  a warranty is a promise by one party that a particular state of affairs is true or that a particular thing will be done. In most non-insurance contexts,  breach of warranty gives rise to a claim for damages for breach of contract only. In relation to the sale of goods, a warranty is contrasted to a condition. Breach of a condition gives rise to a right for the innocent party to terminate the contract. Under the Marine Insurance Act, which codifies marine insurance, and has influenced insurance law generally, a warranty is a promise or condition which must be complied with, whether or not it is material to the risk.  Unlike the warranty under general contract law, breach of a warranty will commonly entitle the insurer to be discharged. A basis of contract clause may provide that breach of warranty is deemed a fundamental breach of a contract and entitles the insurer to avoid it.… Read the rest

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Insurable Interest An insured must have an insurable interest in the matter insured.  He must stand to lose in the event of the insured event occurring.  If an insured lacks the interest in the subject matter insured, the policy is enforceable. It is possible for persons to have joint policies and be co- insured, when each has an interest in the same matter. The Life Assurance Act 1774 prohibited life policies on any personal event in which the insured  no interest or by way of gaming.  This Act was extended to Ireland by the Life Insurance (Ireland) Act, 1866.  A policy is null and void and unlawful in the absence of the requisite interest on the part of the insured. Following the Insurance Companies Act, 1909 and the Insurance Act, 1936, most close relatives of an insured will have an insurable interest in his or her life. Indemnity and Other Policies Indemnity is the principle by which a person agrees to hold good and reimburse another, for loss actually incurred.  … Read the rest

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Overview Life policies are fundamentally different from other policies of insurance.  They are not policies of indemnity which compensate a person for loss actually incurred on the occurrence of an insured risk. It is sometimes said that a life insurance policy is a contingency policy,  rather than an indemnity policy. Instead, a life policy provides for payment of a fixed or ascertainable sum on a pre-agreed event, usually death. A life policy may have the characteristics of an investment.  A life or equivalent policy may have both a risk element and an investment element. The general principles of insurance apply to life insurance. The principle of utmost good faith is especially important in the context of life insurance.  Any false or misleading answer in the application form will entitle the insurance company to avoid the policy. Any material fact known to the policyholder must be disclosed. The most common form of life policy is one that pays out a fixed sum on death within a certain period. … Read the rest

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Deliberate Acts v Accidents Insurance is not generally available in respect of acts deliberately undertaken. It is usually limited to cover for risks that are largely outside the control of individuals. However, the fact that the action is deliberate however does not necessarily preclude insurance, particularly where the act is not intentional. Deliberately unlawful acts will not be covered. Public policy has long taken the view, that insurance should not cover the intentional commission of a criminal or wrongful act.  This is based on the principle that the law will not uphold a claim based on illegality. Notwithstanding the strict position,  insurer does not seek to deny cover,  even where injuries are caused by dangerous driving, or where they constitute death by dangerous driving or manslaughter. As indemnity insurance exists to protect innocent third parties, the courts are very reluctant in practice to use public policy, to deny compensation. For example, a court is unlikely to rely on breaches of health and safety legislation, to cause an employer’s liability policy to be repudiated.… Read the rest

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Motor Insurance A motor insurance policy must insure drivers or persons who use motor vehicles (other than excepted persons) in respect of sums which may be liable to pay to any person for damages and costs on account of injury to person or property caused by the negligent use of a mechanically propelled vehicle to which the policy applies. The policy must not contain certain restrictive conditions which are prohibited under the legislation.  Covers may not be terminated without consent or without giving seven (now ten) days’ notice in writing.  The property damage liability must be covered up to €200,000. Compulsory insurance applies to persons who are in or on a vehicle.  This includes persons suffering an injury while entering, getting out of, being put into on, alighting from or being taken out of or off the vehicle and injury caused by being thrown out of or off the vehicle. The fact that liability to passengers is compulsorily insurable under motor vehicle policies may transfer a liability from employer’s liability cover to the relevant motor insurance cover, where vehicles are adapted for passengers or are capable of accommodating passengers.… Read the rest

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Nature of Policy Liability insurance indemnifies the insured person against legal liability to third parties.  The liability is for personal injury, death, damage to or loss of property and financial and economic loss. The law of tort / civil wrongs defines circumstances in which a person may become liable to compensate another. Negligence is the most pervasive tort. A liability insurance policy is a contract of indemnity.  This means that the insured’s rights under the policy arise if becomes liable to a third-party.  In the absence thereof, he has suffered no loss. The extent of the loss determines the insurer’s maximum liability under the policy. Insurance policies provide two broad types of cover.  The policy may provide cover in respect of the occurrence of insured risk during the period of the policy. In contrast, a claims made policy, commonly found in professional negligence policies,  provide cover in respect of claims made and circumstances reported to the insurer during the period of cover.… Read the rest

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Risks Covered Public liability refers to liability incurred to members of the public by reason of negligence or breach of duty in the context of accidental events and occurrences. Public liability insurance policies generally covers accidental loss, damage and injury, and related costs and expenses.  It is typically taken out by businesses in respect of the risks that the members of the public will take proceedings and recover damages in consequence of accidents arising in the course of business. Public liability arises classically from claims in negligence, nuisance and so-called occupiers liability. The classic public liability accident arises on the business premises. Liability in nuisance and occupier’s liability usually arise from states of affair. Both nuisance and occupier’s liability in their modern formulation is largely based on findings of negligence. Accidental Loss Public liability cover usually covers liability which the insured may become liable to pay as damages, for accidental personal injury or illness to persons, damage to property, costs and expenses involved in recovery against the insured or incurred with the consent of the insurer in relation to the claim.… Read the rest

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Cover Product liability cover will typically provide an indemnity against sums which the insured becomes liable to pay as compensation for accidental bodily injury or illness to persons, or for accidentally damaged property, caused by defects in goods sold, supplied or repaired by it. Product liability is based on negligence and on the Products Liability Directive, which was given effect in Ireland by the Liability for Defective Products Act, 1991. There is no uniform cover. Policy wording and cover may vary from case to case. The policy may cover the supply of goods in accordance with the contract, in breach of contract or may include that which is wholly in breach of and even outside of the scope of what is agreed to be supplied. Policies may be expressed to cover liability which arises in consequence of goods being defective.  In other cases, the policy may simply refer to liability arising from the goods. … Read the rest

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Professional Firms Traditionally professionals referred to the church, medicine and the law. It now it refers to any service provider, where intellectual skill or manual skill controlled primarily by intellectual skill is involved. There must be a predominance of intellectual skill in the exercise of the manual skill. Many professional firms are partnerships and sole practitioners. In the case of partnership firms,  the policy usually covers existing and partners.  It will generally indemnify the partners in relation to the negligence of previous partners, for which they may be liable. Risks Covered Professional Indemnity Insurance covers legal liabilities arising from negligence, in the exercise of professional activities or duties.  The policy will be relative to the particular profession or business concerned.  Ultimately, the degree and extent of cover depend on the wording of the policy. Professional indemnity claims may arise from failures to provide proper advice, failures of service and design failures. … Read the rest

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Employers’ Liability Insurance Employers liability insurance is not mandatory in Ireland,  unlike the position in the United Kingdom.  Employers liability insurance is, however, a practical necessity for employers and business owners. Employers liability claims may arise from accidents and incidents in the workplace.  They may also arise from occupational injuries, which manifest themselves many years after termination of employment. Policies typically cover claims taken by employees, against both the employer and the occupier/owner who contracts for the works. It is presumed in the absence of clear wording which otherwise provides, that an indemnity/insurance contract does not cover loss and damage incurred by the insured in consequence of his own fault or negligence. The courts will not read in liability to indemnify another against the consequences of his own negligence, in absence of clear wording. Employers’ Duties The extent of duties owed by employers has increased through the recognition of new occupational diseases and conditions. … Read the rest

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Nature of Risk A material damage policy is commonly referred to as a buildings or fire insurance policy.  The risks and types of loss covered are wider than just fire damage risks and they have expanded over time. Material damage policies exist in a wide variety of forms. Material damage risks are often included in “all risk”  policy. Despite the name, the risks are defined. Specified risks are excluded. The typical all risks policy covers most accidental damage to and destruction of property. The loss must generally not arise by reason of gradual events including wear and tear. The insurer undertakes to pay the value of the insured property at the time of the loss, subject to the limit of liability.  Material damage extends to real and personal property.  The policies classically cover certain accidental, unexpected and typically sudden events.  The events are statistically possible or even likely in the longer term, but relatively unlikely relative to the typical policyholder.… Read the rest

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Nature Business interruption insurance covers loss of business profits, arising from the occurrence of an insured risk.  The policy will specify the basis of calculation of performance, typically by reference to historical accounts. The cover is designed to cover a period until the business assets are restored. The business interruption may be total or partial.  It may constitute a reduction in profits. The insured party is obliged in good faith to take all steps to minimise the loss and avoid it.  He must act diligently and judiciously.  The terms in which the duty is cast will depend on the policy. The insured will be obliged to do all that is reasonably practicable to minimise the interference and interruption to the business. This insured must act in good faith.  He should act as if he is not insured.  The obligation to mitigate is significant.  The insurance policy of its nature obliges the insured to minimise and mitigate loss.… Read the rest

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