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Principles of International Insurance Law
Pages 3 (753 words)
An insurance company was to be held to have waived forfeiture for non-disclosure by the insured only after a clear communication to that effect was established. Sufficient knowledge was not to be imputed until the relevant information could be said to have been received by a person authorised and able to appreciate the significance of the information.
Did it operate as an inducement to the insurer to enter into the policy In order to be entitled to avoid a contract of insurance or reinsurance on the ground of non-disclosure the insurer must show both that the fact not disclosed was material, and that its non-disclosure induced the contract. To be material a fact did not have to have a decisive influence on the mind of the prudent underwriter. The test is as stated in subsections 18(2) and 20(2) which relate to non-disclosure and misrepresentation respectively and which set out the common law principles relevant to non-marine (as well as marine) insurance. The material non-disclosure or misrepresentation must induce the contract. It is not sufficient that the non-disclosure or misrepresentation is material. ". . . there is to be implied in the Act of 1906 a qualification that a material representation will not entitle the underwriter to avoid the policy unless the misrepresentation induced the making of the contract, using "induced" in the sense in which it is used in the general law of contract" and "in practice the line between misrepresentation and non-disclosure is often imperceptible."
The claimants insured their yacht with the defendants for a value as certified by an independent valuer. ...
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