Page 211 - Fire Insurance Ebook IC 57

The Insurance Times

Warranties Representations

A warranty has to be strictly complied A misrepresentation will

with. It may not be material avoid the contract only if

it is material.

"A warranty is a condition precedent Contract remains valid
and unless it is performed there is unless it is material
no contract.
Insurers cannot avoid
A breach of warranty enables the claim if it is not material
insurers to avoid a claim whether
or not the breach has caused the
loss or aggravated the loss.

Ex-gratia payments

n These are claims which are paid as a matter of grace where the
loss is outside the scope of the policy or the liability under the
policy, in strict legal terms, is doubtful.

n For example, due to a honest mistake, a certain item of property
may not have been included in the insurance, although the
insured's bonafide intention was to include such property

n Whenever ex-gratia payments are effected, it is the practice not to
pay the full amount of the loss, and such claims are paid "without
precedent' that is, such payments do not place an insurer under
an obligation to meet similar claims in similar circumstances in the
future.

n Subrogation rights do not arise under ex-gratia payments

n Reinsurance arrangements, whether treaty or facultative, usually
make provision that reinsurer will automatically follow the action
of the ceding Company.

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