Insurance Contracts

The principal types of insurance contract are:

  • marine insurance
  • aviation insurance
  • non-marine insurance
  • personal accident and sickness insurance
  • liability insurance
  • life insurance and endowment insurance
  • motor vehicle insurance
  • property insurance, and
  • pecuniary loss insurance

At common law a contract of insurance is based on the utmost good faith; if one party does not observe the utmost good faith then the other party may avoid the contract. The most frequent application of this principle is in the area of non-disclosure and misrepresentation. The principle permits either party to avoid the contract altogether if it is established that the other party has failed or omitted to disclose a material fact, or that the other party has made an innocent misrepresentation of a material fact. The duty is a common law duty in the sense that it arises from the general common law principles of insurance: it is not merely a contractual duty arising from the terms of the particular contract in question.

However, the application of the common law principle to written misrepresentations is modified by the Insurance Law Reform Act 1977. The principal effect of those statutory modifications is that an insurer can no longer avoid a policy for an immaterial written misrepresentation on the basis of a warranty in the insurance contract that all the insured's statements, material or immaterial, are accurate.

Consequently, if you are in dispute with your insurance company as a result of the insurer asserting that you made an inaccurate statement when taking out your insurance policy, or during the claims process, and you believe that the latter is irrelevant to your claim, talk to Rennie Cox.