Remedies for breach of the duty of fair presentation If, prior to entering into this insurance contract, an Insured breaches the duty of fair presentation, the remedies available to the Insurer are set out below.


> Deliberate or reckless breach:


• The Insurer may avoid the contract, and refuse to pay all claims; and,


• The Insurer need not return any of the premiums paid.


> Not deliberate or reckless,


The Insurer’s remedy shall depend upon what the Insurer would have done if the Insured had complied with the duty of fair presentation:


If the Insurer would not have entered into the contract at all, the Insurer may avoid the contract and refuse all claims, but must return the premiums paid.


If the Insurer would have entered into the contract, but on different terms (other than terms relating to the premium), the contract is to be treated as if it had been entered into on those different terms from the outset, if the Insurer so requires.


In addition, if the Insurer would have entered into the contract, but would have charged a higher premium, the Insurer may reduce proportionately the amount to be paid on a claim (and, if applicable, the amount already paid on prior claims). In those circumstances, the Insurer shall pay only X% of what it would otherwise have been required to pay, where X = (premium actually charged/ higher premium) x 100.


> Breach of duty of fair presentation prior to entering into a variation of contract,


The remedies available to the Insurer are:


• If an Insured’s breach of the duty of fair presentation is deliberate or reckless the Insurer may by notice to the Insured treat the contract as having been terminated from the time when the variation was concluded; and the Insurer need not return any of the premiums paid.


• If an Insured’s breach of the duty of fair presentation is not deliberate or reckless, the Insurer’s remedy shall depend upon what the Insurer would have done if the Insured had complied with the duty of fair presentation:


- If the Insurer would not have agreed to the variation at all, the Insurer may treat the contract as if the variation was never made, but must in that event return any extra premium paid.


- If the Insurer would have agreed to the variation to the contract, but on different terms (other than terms relating to the premium), the variation is to be treated as if it had been entered into on those different terms, if the Insurer so requires.


- If the Insurer would have increased the premium by more than it did or at all, then the Insurer may reduce proportionately the amount to be paid on a claim arising out of events after the variation. In those circumstances, the Insurer shall pay only X% of what it would otherwise have been required to pay, where X = (premium actually charged/higher premium) x 100.


- If the Insurer would not have reduced the premium as much as it did or at all, then the Insurer may reduce proportionately the amount to be paid on a claim arising out of events after the variation. In those circumstances, the Insurer shall pay only X% of what it would otherwise have been required to pay, where X = (premium actually charged/ reduced total premium) x 100.


Karen Brain


Managing Director – solicitor non-practising


Matrix Insurance Services Ltd Tel: 01892 724060


enquiries@matrix-ins.co.uk


Lloyd’s of London started in the 17th Century in a coffee house near the River Thames. The first class of business was marine insuring against things such as storms and piracy.


72 | The Report • March 2017 • Issue 79


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