Table Of ContentINSURANCE LAW
AN INTRODUCTION
Related titles
A Guide to Reinsurance Law
by Robert Merkin
(2007)
Private International Law of Reinsurance and Insurance
by Raymond Cox QC, Louise Merrett and Marcus Smith
(2006)
The Law of Insurance Contracts, 5th Edition
by Professor Malcolm A. Clarke
(2006)
Insurance Disputes, 2nd Edition
by Rt. Hon Lord Justice Mance, Iain Goldrein QC and Robert Merkin
(2004)
Good Faith and Insurance Contracts, 2nd Edition
by Peter MacDonald Eggers, Patrick Foss and Simon Picken
(2004)
INSURANCE LAW
AN INTRODUCTION
EDITED BY
PROFESSOR ROBERT MERKIN
First published 2007 by Informa Law
Published 2013 by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
711 Third Avenue, New York, NY 10017, USA
Routledge is an imprint of the Taylor & Francis Group, an informa business
© Informa Law
ISBN 978 1 84311 6776
ISBN 978-1-843-11677-6 (hbk)
All rights reserved. No part of this publication may be reproduced,
stored in a retrieval system, or transmitted, in any form or by any
means, electronic, mechanical, photocopying, recording or otherwise
without the prior permission of Informa Law
Whilst every effort has been made to ensure that the
information contained within this book is correct neither the
authors nor Informa Law can accept any responsibility for
any errors or omissions or for any consequences resulting therefrom.
Typeset by
Interactive Sciences Ltd, Gloucester
GENERAL EDITOR’S PREFACE
This book is intended to be a practical guide for lawyers and professionals
working in and with the insurance market. The publishers have assembled a
distinguished team of lawyers and insurance practitioners, each of whom has
been asked to prepare a practical yet comprehensive guide to the most sig-
nificant issues affecting insurance law and practice. Fully up to date, each
chapter sets out the framework of the law, and incorporates commentary on
the most important and recent judicial decisions. It is hoped that the structure
that has been adopted highlights the key matters which typically arise in
insurance disputes, and does so in a manner more readily accessible than is
often the case where the material is presented in traditional textbook form.
Rob Merkin
Sidmouth
July 2007
PUBLISHER’S NOTE
There are numerous case report studies throughout this book. Take time to
understand the judgment in the case, and the reasons for it. Where important
points of law are presented you will see this symbol:
This will remind you that particular attention should be paid to that pas-
sage.
Cases reported in Lloyd’s Insurance and Reinsurance Law Reports can be
viewed online at www.insurancelawreports.com. Look for this symbol:
v
This page intentionally left blank
AUTHORS’ BIOGRAPHIES
Professor Robert Merkin
Professor Robert Merkin is Professor of Commercial Law at Southampton
University. He is the author of a number of texts on insurance, reinsurance
and arbitration law, and edits Lloyd’s Law Reports: Insurance and Reinsurance,
and Insurance Law Monthly. His works have been cited in several High Court
decisions in England together with a number of other jurisdictions including
the High Court of Australia and the U.S. Supreme Court. Professor Merkin is
a member of the Presidential Council of AIDA, Secretary to the AIDA Rein-
surance Working Party, a member of the Law Society’s Insurance Law Sub-
Committee and a past member of the Executive Committee of the British
Insurance Law Association.
Angus Rodger
Angus Rodger is a partner in the London office of U.S. law firm Steptoe &
Johnson. This practice is focused on insurance and reinsurance, and covers
dispute resolution, regulatory advice, ART and complex transactions involv-
ing insurance and policy drafting. He is the author of a book on EC insurance
law, a contributing author to a book on reinsurance claims handling, and a
frequent contributor to industry journals and conferences.
John Lowry
John Lowry teaches Insurance law at University College London, where he is
a Professor of Law. He has also taught in the U.S.A. and practised in Canada.
He is the author of a number of works including Insurance Law: Doctrines and
Principles (2005), cited by the Supreme Court of Canada in Oldfield v. Trans-
america Life Insurance Corp of Canada2002 SCC 22, and Insurance Law: Cases
and Materials (2004). In 2001 he was appointed a Visiting Fellow at the
University of Connecticut’s Center for Insurance Law Research.
Alison Green
Alison Green is a barrister and joint leader of the Insurance and Reinsurance
Group at Two Temple Gardens. She has extensive experience of insurance and
reinsurance litigation both before the courts and in arbitrations. She has
represented major insurance and reinsurance companies, Lloyd’s underwrit-
ers, the Corporation of Lloyd’s, insurance brokers and insureds. She has also
acted for and against insureds and insurers in professional negligence cases,
including insurance brokers. She is a Vice-President of the British Insurance
Law Association, having been its chairman from 1994 to 1996. She is a trained
mediator and sits as an arbitrator. She is on the panel of arbitrators of AIDA
vii
viii Authors’ Biographies
Reinsurance and Insurance Arbitration (UK) (ARIAS). She chairs and speaks
at conferences on insurance and reinsurance law and has written widely in
those areas. Alison is recognised by the forthcoming edition of Chambers
Directory of the Legal Profession as a leader at the Bar in the field of insurance
law.
Alison Padfield
Alison Padfield is a barrister at Devereux Chambers specialising in commer-
cial law, insurance and reinsurance and professional negligence. She studied
law at Oxford University and holds Master’s degrees from both Oxford Uni-
versity and the University of Brussels. She is the author of Insurance Claims
(2nd edition, 2007).
Christopher Henley
Christopher Henley, a Fellow of the Chartered Insurance Institute, is a Coun-
sel specialising in insurance and reinsurance at the London office of Debevoise
& Plimpton LLP. His publications include The Law of Insurance Broking and
All Risks Property Insurance (co-author, which won the British Insurance Law
Association prize in 1996). He is a Contributing Editor of The Encyclopedia of
Insurance Law and Astor’s Law of Lloyd’s, and has contributed chapters to
Reinsurance Practice and the Law, Insurance Disputesand Privity of Contract. He
is a member of the Accident Committee and the Advanced Study Groups
Committee of the Insurance Institute of London, and the British Insurance
Law Association committee on Insurance Contract Law Reform. He has also
been elected a Vice President of the Insurance Institute of London.
Dr Baris Soyer
Dr Baris Soyer is a reader in commercial and maritime law at the University
of Wales, Swansea and has previously lectured at the Universities of South-
ampton and Exeter. He is currently a member of the Institute of International
Shipping and Trade Law, British Insurance Law Association, British Maritime
Law Association, Society of Legal Scholars, and the Higher Education Acad-
emy. He is the editor of the Journal of International Maritime Law and is also
on the editorial board of Shipping and Trade Law and Baltic Maritime Law
Quarterly. His first book, Warranties in Marine Insurance, was the joint winner
of the Cavendish Book Prize 2001. This book has also been awarded by the
British Insurance Law Association Charitable Trust for its contribution to
insurance literature during 2001–2002. Dr Soyer is currently involved in the
teaching of marine insurance law and admiralty law at LLM level.
CONTENTS
Preface v
Authors’ Biographies vii
Table of Cases xiii
Table of Legislation, Conventions and Rules xxvii
1. AN INTRODUCTION TO INSURANCE AND
INSURANCE LAW 1
Introduction to insurance 1
Formation of an insurance contract 6
Premium 11
Privity and third-party rights 16
Insurable interest 20
Insurance intermediaries 23
Regulation of insurance in the U.K. 30
Test your understanding 34
2. UTMOST GOOD FAITH 37
Elements of the duty of utmost good faith 37
Non-disclosure: materiality of facts and inducement 39
Facts material to insurance contracts 45
Misrepresentation 55
A post-contractual duty of good faith? 59
Agents and the proposal form 63
Remedies for breach of duty 67
The insurer’s duty of utmost good faith 70
Practice and reform 71
Appendix: The relevant provisions of the Marine Insurance Act
1906 74
Test your understanding 75
3. TERMS OF INSURANCE AGREEMENTS 79
Construing insurance terms 79
Warranties 85
Conditions precedent 95
Innominate terms 100
Exclusion clauses 102
Test your understanding 104
ix
