Law of Insurance Warranties, The
The Law Commission’s previous reports and recommendations on warranties
5.1 As long ago as 1957 the Law Commission recommended the abolition of warranties,1 but this recommendation was never pursued. In 1980 the Commission observed ‘it seemed quite wrong that an insurer should be entitled to demand strict compliance with a warranty which was immaterial to the risk.’2 The Law Commission’s 1980 report, Insurance Law: Non-Disclosure and Breach of Warranty, adopted a complex approach under which a breach of warranty could not be relied upon if, inter alia, it could not have increased the risk that the event which gave rise to the claim would occur in the way that it did in fact occur.3 The Commission recommended that basis clauses should be abolished and that insurers be required to provide policyholders with written documents containing any warranties. The Commission observed that its proposals would not prevent specific facts from constituting a warranty, provided this was incorporated into the policy itself.4 Clause 8(2) of the draft Bill accompanying the Commission’s report stated that an insurer would not be entitled to rely on a breach of warranty unless the insured was supplied with ‘a written statement of the provision which constitutes the warranty.’ This statement was to be supplied to the insured at or before the time the contract was entered into, or ‘as soon thereafter as was practical in the circumstances of the case.’ The Commission’s subsequent reports acknowledged that the problem with clause 8(2) was that an insurer could comply with it even if it buried the warranty in a mass of small print.5
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