Insurance Contracts CP - Law Reform Commission

(2) Factors reducing the risk
3.47 ―Any circumstance which diminishes the risk‖. The Marine Insurance Act 1906, section
18(3)(a) provides that factors that make a loss less likely to occur need not be disclosed.
In Carter v Boehm Lord Mansfield said that
―the underwriter needs not to be told what lessens the risque agreed and understood to be run
by the express terms of the policy…if he insures a voyage, with liberty of deviation, he need
not be told what tends to show there will be no deviation.‖ 72
In Manor Park Homebuilders Ltd. v AIG Europe (Ireland) Ltd 73 an unoccupied building was the subject of
a proposal for fire insurance cover. The proposal failed to disclose that steel shutters to the lower floor
had been removed and the windows and doors were bricked up with concrete blocks. McMahon J. held
that this was not a material non-disclosure on the basis that this measure rendered the building more,
rather than less, secure. MacGillivray remarks that this exception
―may seem obvious, but such a fact does literally fall within the definition of a material fact,
since it would influence the underwriter in deciding whether to take the risk or not, or in fixing
the premium.‖ 74
(3) Factors covered by any warranty
3.48 Any circumstance which it is superfluous to disclose by reason of any express or implied
warranty. If a material circumstance is not disclosed, but the facts not disclosed are the subject of an
express or implied warranty, or an exclusion clause, non-disclosure will not provide a basis for repudiating
the contract because the insurer will be entitled to rely upon the contractual promise or limitation in
question: Ross v Bradshaw. 75
(4) Waiver
3.49 ―Any circumstance as to which information is waived by the insurer‖: see the Marine Insurance
Act 1906 section 18 (3)(c). This is perhaps the most difficult and unpredictable exception to apply in
practice.
3.50 There are several Irish cases in which waiver plays a part in explaining why the contract of
insurance remained enforceable, often in conjunction with other factors. For a waiver to be made out
however it will be necessary for the insurer to conduct his business in such a way as to intimate that
certain facts are not required to be disclosed. The proposer may have disclosed sufficient facts that will
require insurers to investigate those surrounding details or circumstances to the prudent insurer standard.
3.51 In the first situation an insurer may specifically state that no duty to disclose is required - over
the telephone motor policies are increasingly concluded on this basis. In Aro Road and Land Vehicles v
Insurance Corporation of Ireland 76 the minority judgement of Henchy J indicated that where travel or
transport insurance was concluded ‗over the counter‘ between an agent of the insurer, the proposer being
given no opportunity to furnish all material information, the conduct of the insurer will preclude full
disclosure. The broader view of the majority was that in cases of over-the-counter insurance, absent
fraud, the proposer needs only to answer the questions asked. McCarthy J said that:
―if the insurer were to have the opportunity of denying or loading the insurance one purpose of
the transaction would be defeated. Expedition is the hallmark of this form of insurance.‖ 77
72
73
74
75
76
77
(1766) Burr 1905 at 1909.
[2009] 1 ILRM 190.
Para 17-081.
(1761) 1. Wm. Bl. 312.
[1986] IR 403.
Ibid at 415.
76