General principles of insurance contract law
General principles of insurance contract law

The following Insurance & Reinsurance guidance note provides comprehensive and up to date legal information covering:

  • General principles of insurance contract law
  • What is insurance law?
  • Reform of the insurance sector
  • What is insurance and why is it taken out?
  • The parties to insurance contracts and their agents
  • Presenting the risk to insurers—disclosure and the duty of good faith
  • How and when the insurance contract is formed
  • Inception, duration and renewal of insurance policies
  • Key terms in an insurance contract
  • Classification of terms in an insurance contract
  • more

What is insurance law?

Insurance law can be split into three parts:

  1. insurance contract law which governs the contractual relationship between insureds and insurers

  2. the law of intermediaries which regulates insurance business which is transacted through agents (this is true for most insurance business)

  3. insurance company law which is concerned with the financial soundness, probity and regulation of insurance companies

This Practice Note largely deals with the first part, insurance contract law. For more information on the requirements of the Insurance Distribution Directive, see Practice Notes: Insurance Distribution Directive (IDD)—essentials, Insurance Distribution Directive (IDD)—scope, registration, passporting and sanctions, Insurance Distribution Directive (IDD)—organisational and conduct of business requirements, Insurance Distribution Directive (IDD)—insurance-based investment products and Insurance Distribution Directive (IDD)—Insurance Product Information Document requirements.

For more information on insurance regulation, see: General matters relating to insurance regulation—overview.

Reform of the insurance sector

Following several previous attempts, most notably in 1980 (see the Law Commission’s 1980 report for details), in January 2006 the Law Commission and Scottish Law Commission (together the Law Commissions) started consulting on reforming insurance contract law. Following the consultation, the Law Commissions’ work was broken into three sub-projects:

  1. consumer insurance law reform: pre-contract disclosure and misrepresentation

  2. insurance contract law reform: business disclosure, warranties, insurers’ remedies for fraudulent claims, and late payment

  3. insurance contract law reform: insurable interest

Consumer insurance