Insurance Law-Insurance Contract

2. Insurance Contracts Elements of an insurance contract Must turn to COMMON LAW for a definition. NO definition of an insurance contract in the Insurance Act. -

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S1(1) “Policy” includes any contract of insurance S 5(1): “life policy” means any policy which — (a) provides for the payment of policy moneys on the death of a person or on the happening of any contingency dependent on the termination or continuance of human life; S57(3) In this section, “insuring the life of a person” means insuring the payment of money (or the equivalent) on that person’s death or on the happening of any contingency dependent on the termination or continuance of that person’s life, and includes granting an annuity to commence on that death or at a time to be determined by reference thereto or to any such contingency. Note the terms and conditions of the policy may be covered in areas outside the contract. Including the proposal form.

So does not define “insurance”.

Definition Prudential v Commissioners of Inland Revenue (IRC) [1904] 2 KB 658 -

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Per Channel J: Where you insure a ship or a house, you cannot insure that the ship shall not be lost or the house burned, but what you do insure is that a sum of money shall be paid on the happening of a certain event. That I think is the first requirement in a contract of insurance. It must be  a contract whereby,  for some consideration, usually, but not necessarily, for periodical payment called premiums,  you secure to yourself some benefit, usually, but not necessarily the payment of a sum of money upon the happening of some event. Applied in obiter in Gan Hwa Kian

Gan Hwa Kian & Anor v Shencourt Sdn Bhd [2007] 4 MLJ 554 at para 16: -

Quoted Channel J’s definition in Prudential. Also noted Brett LJ, in Rayner v. Preston [1881] 18 Ch D1 at p 9, one must distinguish the subject-matter of the contract of insurance from the subject-matter of insurance: “Now, in my judgment, the subject-matter of the contract of insurance is money, and money only. The subject-matter of insurance is a different thing from the subject-matter of the contract of insurance … . The only result in the policy, if an accident which is within the insurance happens, is a payment of money.”

 Also noted that the same sentiments were expressed by Bowen LJ, in Castellain v. Preston [1883] 11 QBD 380 at p 397, CA

Elements 1. 2. 3. 4. 5.

Binding contract Risk assumption Event uncertain (outside insured’s control) Which is adverse on occurrence -benefit bestowed Premium to be paid

DTI v St Christopher’s Motorist Assoc [1974] 1 W.L.R. 99 -

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Proprietary club open to members above 25 with full driving license. Upon disqualification or through accident, “chauffeur service” provided for 12 months The claims made by members were examined by a committee which assessed the merits of each claim. The decision of the committee was final, but it did not have an absolute discretion to deprive a member of benefits if he qualified under the rules. Provided that he made truthful declarations in his application form a member was entitled to the services provided by the association. The Department of Trade and Industry sought a declaration that, by undertaking to provide benefits for the members of the association in accordance with its rules, the defendant company was carrying on insurance business and was an insurance company to which the Insurance Companies Act 1958 applied. Held: Court found it a benefit in kind and thus there was an insurance business. Contracts of insurance were not confined to contracts for the payment of a sum of money but included contracts for some benefit corresponding to the payment of a sum of money.  No difference could be drawn between the defendant company paying a chauffeur on the one hand and on the other hand agreeing to pay the individual member a sum of money which would represent the cost to him of providing himself with a chauffeur in the event of his being disabled from driving.  It followed that the arrangements made by the defendant company on behalf of members of the association amounted to insurance and the department was entitled to the declaration sought Cf. Insurance Act 1st Schedule: Clause 4. “policy moneys” includes any benefit, pecuniary or not  So in Singapore, such a decision would be clear. Bear something else in mind. Is there an illegality issue here? Because what is insured arises from an illegality? Not too important but keep cognizant.

Medical Defence Union v DTI [1980] Ch 82 -

The Medical Defence Union Ltd., formed in 1885 as a company limited by guarantee, claimed that it was not an insurance company MDU provided some services for members, including the conduct of legal proceedings on behalf of members, indemnifying them against claims for damages and costs, and

giving advice on various problems, including employment, defamation and professional and technical matters. - In the company’s Memorandum of articles &Articles of Assoc, member has no right to indemnity but only to request help. But defence inevitably given. Benefits discretionary rather than obligatory - The question was whether the contract between each member and the union was a contract of insurance for the purposes of the Act of 1974 - Held: Not an insurance contract One of the three elements of a contract of insurance was that the assured would become entitled to something on the occurrence of some event, that that "something" must normally be of the nature of money or its equivalent, and not some other benefit - What a member of the union became entitled to in certain events was not a right to have proceedings conducted by the union on his behalf or to be given an indemnity but merely a right tc require the union to consider fairly his request for such assistance, with no certainty that it would be provided  Although that right was a "benefit," it was not itself of the nature of money or money's worth, and so it did not satisfy the requirements for a contract of insurance - Further, a member's contract with the union was distinct from a normal contract of insurance in that subscriptions were unaffected by claims, and, as a whole, the general nature of the union's work was far removed from that carried on by those concerns generally accepted as undertaking contracts of insurance - Criticisms of case: members must have regarded it as insurance, should have regulated the union. In re Sentinel Securities PLC [1996] 1 W.L.R. 316 - The company's principal business was the operation of a guarantee protection scheme  In return for monthly subscriptions paid to it by suppliers and installers (of improvements to domestic dwellings) plus a fee in respect of each new contract brought into the scheme - The company authorised the suppliers to issue certificates to their customers where the company undertook that, in the event of the supplier ceasing to trade because of financial failure, it would honour the supplier's original guarantee of the goods supplied and installed. - Held: It is an insurance business - The company – “to protect the customer against one of the effects of the supplier ceasing to trade because of financial failure, bankruptcy or liquidation by providing a substitute in that event for the loss of benefit of the supplier's guarantee; the company therefore undertook for a consideration to provide the customer with compensation in kind for loss suffered in an uncertain event, namely financial failure of the supplier; that that was of the essence of a contract of insurance - The fact that the benefit to be provided to the insured was in kind rather than in money was immaterial; - Therefore, the business done by the company in respect of the guarantee protection scheme was insurance business within the ordinary meaning of that term;” Re Digital Satellite Warranty Cover [2011] EWCA Civ 1413

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Facts: Three businesses provided “extended warranties “ for satellite television equipment digital boxes and associated equipment.  All three targeted people who had purchased Sky satellite systems and whose warranties were about to run out. Initial contact was made by mailshot or telephone  Contractual obligation was to repair or replace faulty or damaged equipment. There was no obligation on it to pay money to the customer in any circumstances. FSA said that they were selling and carrying out insurance contracts without authorisation Held: unauthorised firms – to be wound up . Don’t stray into traditional insurance areas . The risk covered providing for repair and replacement of the equipment equals a contract which provides an indemnity for the costs involved. Both share same risk breakdown of the equipment which will lead to expense on the part of the insured. Cover provided for the risk of malfunction to be repaired or replaced, that risk was essentially a financial one attributable to the insured incurring unforeseen expense

CF US approach US approach, eg. S 22 California Insurance Code. -

Insurance is a “contract whereby one undertakes to indemnify another against loss, damage or liability arising from a contingent or unknown event”

Shifting and spreading of risk + Importance of distinguishing insurance from other arrangements

Formation of an insurance contract General contractual principles apply! Very important. To determine when the insurer comes “on risk” -

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See Marine Insurance Act s 18. An important reason is that all relevant information must be disclosed BEFORE the contract is concluded, failing which it might be invalidated. After the contract is concluded, if there is a change in the circumstances, NO NEED to declare!

Documents required -

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Proposal form (offer) Policy – Evidence of a contract. Sometimes the issuance of a policy is an acceptance of an offer. But sometimes there can be acceptance in terms of a concluded contract issued before the policy Premium (consideration) Certificate of insurance  4(9) Motor Vehicles Act: Motor Vehicles Policy has no effect unless a certificate of insurance is issued. Cover-note: A little form for temporary cover.

 Say you’ve bought a car and want to take it out of the showroom. Need insurance to do that. But insurer still needs to check. So if they want to do business with you, they issue that as a temporary cover.  Just as effective as a policy.  But the concluded policy supersedes it.

Formalities Capacity to insure - 58. —(1) Notwithstanding any law to the contrary, a person over the age of 10 years shall not, by reason only of his age, lack the capacity to enter into a contract of insurance; but a person under the age of 16 years shall not have the capacity to enter into such a contract except with the consent in writing of his parent or guardian. Writing Generally, no need writing at common law (Murfitt : fire policy) but in practice there is writing -

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Murfitt says oral agreement sufficient! cf s22 Marine Ins Act – “a contract of marine insurance is inadmissible in evidence unless it is embodied in a marine policy” s62(2) Insurance Act – (2) It shall not be lawful to make any policy on any event without inserting in such policy the names of the persons interested therein, or for whose use or benefit or on whose account such policy was made. (meaning a policy is envisaged) 4(9) Motor Vehicles Act: Motor Vehicles Policy has no effect unless a certificate of insurance is issued. Means some writing is envisaged.

Murfitt v. Royal Insurance (1922) 10 L1.L.R. 191. -

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The plaintiff was the owner of an orchard and nursery garden. Alongside his ground, there was a railway. Owing to the hot and dry weather during the summer of 1921, many fires were caused by sparks from locomotives He was acquainted with a local agent of the defendants, and he submitted to him a proposal for an insurance for £3,000. The agent said that if the plaintiff did not effect any other insurance meanwhile, he could send in the proposal to the defendants and would hold the plaintiff covered pending a decision by the defendants whether they would accept the proposal or not. Before the defendants had come to a decision, there was a fire in the nursery. Subsequently, the defendants refused to accept the proposal, and they declined also to pay anything to the plaintiff on the ground that their “agent” had no authority to undertake that the plaintiff should be held covered Held: There was authority. The oral agreement bound the defendants On the head of holding out, the evidence showed that on two previous occasions, the plaintiff had insured motor-bicycles with the defendants through the agent, and on each occasion the agent had given him cover in the same way as in the present case and his action had been ratified by the defendants.  ASK: Are these special facts?

Offer Significance of proposal form -

An offer if sent when completed. Renewal notice can also be an offer. Likewise a cover note. Depends on the scenario You are taken to have contracted for the terms of the ordinary standard form policy  Standard terms must be readily available upon request  When is presumption not applicable?

Offer to be certain, unrevoked General Accident v Cronk (1901) 17 TLR 233 -

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Argued that policy contained various terms not referred to in proposal form (eg, commencement, claims procedure) case on PF, what if offer stems from cover note Held: A person making a proposal must be taken to have applied for the ordinary form of policy issued by the company. It is only when there is a condition precedent that the policy must be delivered that the assurer is not on the risk otherwise he is Thus it is immaterial that he has not seen the policy yet. Law assumes that the terms have been agreed to by the insured by reason of his making an offer to the insurers. It is only when the insurers seek to impose additional or unusual terms that it is considered a counter offer and must be brought to the attention of the insured. Note the interfoto case, where harsh or unduly onerous terms not brought to notice of the insured might not be binding on him.

Rust v Abbey *1979+ 2 Lloyd’s Rep 334 -

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Property bond policy – until policy was issued, she never saw detailed terms. The plaintiff in 1973 sold her hotel for £75, which she then paid into her account at the National Westminster Bank. She decided to invest most of that money until she had made up her mind how to deal with it definitively. She spoke to an acquaintance who recommended her to put the money in Abbey Life Property Bonds. As a result, the plaintiff met Abbey on at least three occasions in 1973.  At the first meeting, P gave a detailed account of the nature of property bond investments and showed the plaintiff the Abbey Life booklet. At this meeting the plaintiff learned that P was an agent for the first defendants ("the insurers").  At the second meeting, P again launched upon an explanation of the property bond policy and its advantages. The plaintiff asked whether she would be able to withdraw some of her money, but no amount was quantified. P then offered her what was called the "liquidity facility" which was a set of conditions attached to the policy in substitution of the death benefit, surrender value, loan and withdrawal plan clauses in the insurers' standard form of policy. The liquidity facility was not described in the Abbey Life booklet and the plaintiff never saw it in written form until she received the actual policy.  The plaintiff arranged for P to see her accountant and a meeting was arranged for 1 October 1973. On that day, P attended at the accountant's office, gave his presentation of the bond policy, and of the liquidity facility which could be endorsed

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thereon, and stressed the tax advantages to be gained by this form of investment. The accountant telephoned the plaintiff in the presence of P and told her that he approved of the proposed investment.  On the same day, ie 1 October, at the third meeting, the plaintiff completed the application form for Abbey Property bonds, answered various questions which were consistent only with a life assurance proposal and gave the name and address of her general medical practitioner for inquiries which could only be relevant to life assurance. The plaintiff and P then went to the bank and the plaintiff, after a discussion with the bank manager, paid over a cheque in favour of the insurers. The policy was signed on 26 October 1973 and sent on the same day by registered post to the plaintiff. In March or April 1974, the plaintiff telephoned the insurers requesting that £ her investment be returned to her and began a correspondence for the return of her money. The plaintiff was unwilling to accept a surrender value and the insurers were unwilling to return all the money she had paid to them. The plaintiff alleged that she had never intended to make a long-term investment with the insurers but rather a short term deposit with the similarly named Abbey National Building Society.  She contended that she was misled by P as to the nature and purpose of the property bonds,  that he exercised undue influence to procure her application and  that, in any case, no binding contract was ever concluded between her and the insurers. The Court of Appeal held that a failure by a proposed insured to reject a proffered insurance policy for seven months justified on its own an inference of acceptance Her claim was dismissed on the ground, inter alia, that she had had the policy in her possession at the end of October 1973 and raised no objection to it until some seven months later Although silence or inactivity was not evidence of acceptance, having regard to the circumstances of the facts in that case, there was an inevitable inference from the conduct of the plaintiff, in doing and saying nothing for seven months, that she accepted the policy as a valid contract between herself and the first defendants' insurers.

Acceptance Must be unequivocal and unconditional Terms accepted not found in offer may tantamount to counter-offer. Canning v. Farquhar (1886) 16 Q.B.D. 727 -

“No cover till premium has been paid”  8 Dec: sent in proposal form:  14 Dec: insurer accepted at premium of $x — “no assurance till premium’s paid”  5 Jan: C fell  9 Jan: tendered premium. C died soon after

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The proposal was accepted at a specified premium but upon the terms that no insurance should take effect until the premium was paid. Before tender of the premium, there was a material alteration in the state of the health of the proposer and the company refused to accept the premium or to issue a policy. It was held that the nature of the risk having been altered at the time of the tender of the premium, there was no contract binding the company to issue a policy.  The question was, however, left open as to whether if there had been no alteration in the risk, the company would have been legally entitled to refuse to accept the premium and to issue a policy. The duty to disclose all material facts ultimately falls on the proposer. It is important to note the duty to disclose all material facts extends right up to the date the Company accepts the proposal and goes on risk

Loh Sai Nyah v American International Assurance Co Ltd [1998] 2 M.L.J. 310 MCA -

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Offer in proposal form (pf) for life policy.  24 Jun: insured paid premium by cheque accepted by agent (authority to do so?)  26 Jun: insured killed  27 Jun: insurer received premium (delay on agent’s part)  30 Jun: insurer received pf filled in earlier The respondent denied the issue of the policy and alternatively, if it was issued, it was conditional that no liability was undertaken until the proposal had been accepted and the premium paid in full. The said condition was stated on the proposal form submitted by the deceased. Held: Appeal dismissed Principle: insurer not bound until he accepts. Question of agent’s authority  Insurer had not had the chance to assess and look at the form per se. No chance to judge the risk.  Court had held that the agent had no authority to accept the proposal, only to receive the form.. Murfitt was distinguished as having special circumstances (holding out and ratification)

Looker v. Law Union & Rock Insurance Co. [1928] 1 K.B. 554. -

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Insurer accepted proposal form but with qualification: “if health remains meanwhile unaffected, policy will be issued on payment of 1st premium … risk won’t commence until receipt of first premium”. Condition precedent — no material change of risk. Proposer became ill, tendered premium, died next day. Held: known changes prior to risk commencement to be disclosed. Insurer to have choice to decide. Not liable.

Harrington v. Pearl Life Assurance Co. Ltd. [1914] 30 T.L.R. 613. -

Non-disclosure of health risk. The acceptance is made in reliance upon the continued truth of the representation made in the proposal which it was agreed should form the basis of the contract of insurance, in the

belief that there has been no material change in the risk offered, and therefore, that if anything has happened materially to increase the risk between the proposal and the acceptance the insurance company are not bound, because that which they have made a condition of the contract going to the root of it has not been fulfilled. Borhanuddin Bin Haji Jantara & Ors. v. American International Assurance Co. [1987] 1 M.L.J. 22 -

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21 Nov: submitted pf. Declaration: “ assurance not to take effect until policy is issued and delivered to me … and first premium paid .. Provided that if any premium paid in cash at time of signing and conditional receipt given, … terms of receipt shall apply ..” 2 Dec: paid cash sum of $118. Was issued a receipt: “said sum received on account of payor … and company is in no way committed thereby to the acceptance thereof …” 4 Dec: Air crash Insurer argued: no policy issued and receipt said not bound Held: CA — she had performed her part. Contract concluded when company accepted premium They noted that premium was not paid at the time of signing. So declaration did not apply. So they objectively looked to see whether there was acceptance There was actually evidence that the policy had been issued not sent out. The Court held that the payment of the cash sum was for the first premium and since the respondents would have issued the policy if the deceased had not died, a contract of assurance was concluded when the respondents accepted payment of the premium from the deceased on 2 December 1977 Critique: This ignores the clear terms of the contract  Contract stipulated that there is no insurance until the policy was issued and first premium paid. Further provided that the terms of the receipt shall apply, the receipt providing that company was not committed to acceptance by receipt.  She signed to the declaration. This arguably represents a twisting of the facts by the Court?

Chan Yoke Lain v. Pacific & Orient Insurance Co. Sdn. Bhd. [1999] 1M.L.J. 303 MKLCA -

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The appellant filed an action against the respondent under the personal accident policy (`the PA policy`) issued by the respondent to the deceased. The respondent company repudiated liability in respect of the claim on the sole ground that the signature of the deceased, which appeared on the proposal form (`D2`), was not that of the deceased. The appellant`s action was dismissed by the trial judge and the appellant appealed. The issue that had to be decided was whether the respondent can repudiate liability after the deceased had ratified the proposal by paying the premium Held: Appeal allowed By the deceased ratifying the proposal by payment of the premium and the acceptance of the proposal by the respondent by issuing a receipt for the premium received and the issuance of the PA policy, a valid contract was concluded. It was too late for the respondent to avoid liability by alleging that the signature on D2 was not that of the deceased.  Unless there was evidence of collusion or connivance on the part of its agent, the respondent could not repudiate liability.  In the present case, there was no allegation of collusion or connivance

Lim Kitt Ping Lynnette v. People's Insurance Co. Ltd. & Anor. [1997] 3 S.L.R.1018

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The plaintiff's car was insured with the first defendant insurer through the second defendant insurance broker.  The policy provided that "[a]ll differences arising out of this policy shall be referred to the decision of an arbitrator ...".  A premium warranty clause was appended to the policy. It provided that full payment of premium on time in full was "a condition precedent to liability under this policy".  It also provided that if the premium was not paid in full, the cover "shall be deemed to have terminated from the expiry premium warranty period ... without prejudice to any liability incurred before that date". When the insurance broker forwarded the required documentation to the insurer in April 1991, the latter did not issue a policy or collect the premium immediately. The policy was issued on 25 June 1991 together with a debit note for the premium. The plaintiff met with a serious accident on 30 July 1991 and the car was badly damaged. The insurance broker paid the premium to the insurer by a cheque dated 30 October 1991. The insurer issued its receipt only three months later, because it took legal advice before presenting the cheque for payment. However, when the plaintiff tried to claim under the insurance policy, the insurer disclaimed liability on the ground that the cover under the policy was terminated at the expiry of the premium warranty period, pursuant to the premium warranty clause. They refunded the money. She sued Insurer said that the premium warranty clause applied, and in the alternative the plaintiff had to go, pursuant to contract, to arbitration first. Held: Claim allowed in part By its delay in issuing the debit note the insurer had rendered compliance with the premium warranty clause impossible. When it issued the debit note out of time, it must be inferred that it waived compliance of the premium warranty clause With regards to arbitration, the dispute between the parties had to be a difference arising out of the policy.  Where the dispute was as to whether a contract, which contained an arbitration clause "arising out of" the contract, was entered into at all that issue could not go to arbitration under the clause.  The dispute between the insured and the insurer was not a dispute arising out of the policy. The insurer could not complain that there was no arbitration In obiter: There are the circumstances which may relieve an insurer from the duty to indemnify an insured against a claim such as whether the claim is promptly notified to the insurer and whether the insured has dealt with the claim properly. An insured party's right to be indemnified under a policy must be considered on the facts of each claim.

American International Assurance Co. Ltd. v. Koay Fong Eng [1996] 5 M.L.J.268. -

Signed pf 9 Aug and paid premium 10 Aug. Died few days later; policy issued 19 Aug The respondent who was the administrator of the deceased`s estate submitted her claim to the appellant but it was rejected.

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The respondent filed this action to recover the insured amount. The trial magistrate allowed the claim and the appellant appealed. Court added that deceased had no knowledge of conditions (in proviso). applied contra proferentum rule Followed Borhannudin ASK: IS this too generous?

Free-look/Cooling/Grace period 14 days – to temper aggressive sales tactics -

Insurance (General Provisions) Regulations 2002 Singapore cl 8 GIA: General Insurance Code of Practice

How about how it should be communicated? - Online contracts? See Electronic Transactions Act 2010 s 11(1) and (2) - Acceptance via reliance? See Taylor case. - Note that a cover note is an offer to insure for the future Taylor v Allon (1965) 2 WLR 598 -

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Taking a car out on the road does not amount to an acceptance of an offer to insure unless there is clear evidence that the party intended to deal with that insurance company. No reference to temporary cover note, never acted in reliance on it Was negotiating with new co — nerve to tell police that In appropriate cases, the courts will insist that, for a contract of insurance to be effected, there must have been an offer by one of the parties and an acceptance by the other of that offer, and a unilateral undertaking by an insurer to be liable to an insured does not constitute a binding contract

Consideration Thomson v. Adams (1889) 23 Q.B.D. 361. -

Implied promise to pay = good consideration Premium paid after fire. (Lloyd’s slip). it was held that the initialing of a slip by underwriters constituted acceptance and gave rise to a binding contract of insurance.

Agreement on material terms Agreement on material terms Essential terms: subject-matter of risk (operative clause), premium, duration, amount payable in event of loss (contingency versus indemnity) -

Ask: Standard trade practice? Be aware: Consumer Protection (Fair Trading Act) fr 2009 for life and investment-linked policies may have some impact on unfair or onerous terms . This Act is for your general knowledge.

Cover note Could even be an oral agreement (Murfitt), but ask if there were special circumstances in that case (holding out + ratification)

Legal nature Note that the cover note operates like a full insurance contract, albeit meant to be a temporary cover. -

Not a full policy. Linford ; Loh Sai Nyah

Taylor v. Allan [1966] 1 Q.B. 304. Thomson v. Adams (1889) 23 Q.B.D. 361. Murfitt v. Royal Insurance (1922) 10L1.L.R. 191.

Agent’s authority to issue Who is an agent? -

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“insurance agent” means a person who is or has been carrying on insurance business in Singapore as an agent for one or more insurers and includes an agent of a foreign insurer carrying on insurance business in Singapore under a foreign insurer scheme under Part IIA. “insurance broker” means a person who is or has been carrying on insurance business in Singapore as an agent for insureds or intending insureds in respect of —(a) insurance policies relating to general business and long-term accident and health policies, other than insurance policies relating to reinsurance business NOTE: In some older cases the terms do seem to be used interchangeably. Not the same.

Authority dependent on agency principles or trade custom -

Must be proved. This is important in reference to who a mistake by the agent is attributable to. Normally, it is the principal.

Linford v. Provincial Horse & Cattle Insurance Co. (1864)10 Jur. (N.S.) 1066. -

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It was held that an ordinary local agent of an insurance company is not, without special authority, authorized to bind the company by a contract to grant a policy. In that case, the London agent of a country insurance company accepted the premium from the proposer together with the proposal form, both of which he never tendered to the insurance company as he had misapplied the money. When the plaintiff incurred loss, the company repudiated liability. It was decided that there was no contract binding on the company and that it was not the ordinary duty of such an agent to grant, or contract to grant, policies of insurance and that no special authority had been proved.  What the plaintiff had done was to make a proposal with a deposit which the company was entitled either to accept or reject, and since the company had never accepted it, they were not bound.

Murfitt v. Royal Insurance (1922) 10 Ll.L.R. 191 (1922) 10 Ll. L. Rep. 191 (on WestLaw)

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oral cover note — fire insurance business (past dealings) There seemed to be ratification by the brokers. Also holding out  The agent occupied a position in which he might well have been authorized to give oral cover  He had been habitually given it twice before, to the knowledge of his superiors and with their consent

Mackie v. European Assurance Society [1869] 21 L.T. 102 -

Agent was armed with a stock of cover notes

Stockton v. Mason [1978] 2 Lloyd's Rep. 430. -

broker in non marine insurance business — commercial usage —can issue interim insurance

Governing terms of cover note Implicit agreement on material terms -

Risk, duration and premium It would seem to appear at first shot that, applying Rust v Abbey, the insurer’s standard terms should apply as a matter of logical inference. But there appears to be difficulty caused by Coleman’s case. It may not be so? Analyse. Is it at variance?

May not be unilaterally altered -

Inn Corp and Bagusia cases

Re Coleman's Depositories [1907] 2 K.B. 798. -

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28 Dec: issued cover note for employer’s liability cover 2 Jan: workman injured 3 Jan: policy signed 9 Jan: received policy containing an immediate notice provision 14 Mar: notice given Question of whether the term (immediate notice) of the contract was incorporated into the cover note Held: No, it was not Court appeared to feel sympathy for the insured Stated that he was unaware of the term. How can you do something that he is unaware of, and cannot do it. Thus the term was held not incorporated in the absence of an express incorporation clause.  In contrast with the Rust rule, which suggests effectively that insured is to find out the terms  But can we distinguish cover note from the proposal form? Arguably not? ASK: How far does it operate as a general rule?  Note that this is generally the situation faced in real life.  Why has this case survived for so long? Because lawyers now add incorporation clauses into the policies. That is why it has not been challenged per se  BUT STILL BRING IT UP IN THE EXAM!

Stork Technology Services Asia Pte Ltd (formerly known as Eastburn Stork Pte Ltd) v First Capital Insurance Ltd [2006] 3 SLR 652; [2006] SGHC 101 -

Discussed the meaning of giving notice “immediately”. Must give the person a reasonable time

Neil v. South East Lancashire Insurance Co. (1932) S.C. 35. -

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9 Feb: issued motor policy cover note — subject to usual terms and conditions of policy 16 Feb: accident occurred  Covered by the cover note 18 Feb: proposal form — Insured gave the wrong answer with warranty clause. He said he never had an accident before (well, not until after the cover note was signed) 2 Mar: policy issued. Question was: Does cover note incorporate the wrong answer in proposal form?  Insurer submitted that the policy superceded the cover note retrospectively to include time of accident, and that the cover note incorporated warranty clause Held: No Only refer to general terms not specific answer to specific questions in PF YHY says this is correct. Otherwise, you can be bound by some future event not in specific contemplation.

Inn. Cor. International Ltd v. American Home Assurance Co. [1974] 42 D.L.R. (3d) 46. -

Binder (American term for cover note) — accident insurance on lives of four executives Policy issued 5 months later — excluded those executives (as policy had qualification of fulltime active salaried staff) Held: binder sets out the terms and scope — not open to insurer to unilaterally alter it.

Bagusia v Malaysia Assurance [2005] 2 MLJ 605. -

Cover Note covering barge Cover Note 1 contained certain errors on detailed particulars of barge, it was faxed for rectification of errors When it was returned, a new Cover Note was issued instead with new conditions unilaterally imposed Held: This is not permissible It is still the same contract!

Renewal Note that a renewal of a fixed period indemnity contract is tantamount to making a new contract -

Lambert v Co-operative Insurance Society Ltd *1975+ 2 Lloyd’s Rep 465. As it is a new contract, you are entitled to add on new terms which must of course be mutually agreed upon; and the authorized agent’s knowledge of new term is adequate. AXA Corporate Solutions SA v National Westminister Bank PLC Marsh Ltd [2011] 1 Lloyd’s Rep 438

CONTRA extension of cover, continuation of cover by paying premium (same policy) or life policies -

What are the differences between the concepts?