Chapter 12 – Waiver & Estoppel

Chapter 12 – Waiver & Estoppel

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  Claim on a policy is usually unsuccessful if there has been some default on part of customer
  
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    But if insurer has in some way excused or authorised the default, it cannot later rely on that default as a basis for denying the claim
    
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    The insurer is said to have “waived” its right to set up the default as a defence to a claim, or to be “estopped” from doing so
    
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  Waiver is not really a substantive doctrine
  
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    Rather, it means simply that circumstances have arisen whereby the insurer is prevented from denying a claim by the customer notwithstanding some term in the policy or some other rule appearing to give it that right
    

1. 
   There must have been a representation by the insurer, of an existing fact, to the person seeking to rely on it
   

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  E.g. insurer saying that a policy was in full force and effect though premiums were in arrears
  
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  A representation may be evidenced by written documentation, oral representations, other conduct or silence
  
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  The insurer’s representation must amount to an unambiguous undertaking that the insurer has changed its position as regards its legal relationship with the customer
  

2. 
   The representee (customer) has relied on the representation and acted to his/her potential detriment as a consequence
   

3. 
   Representee must “at the proper time and in the proper manner” object to the representator’s seeking to establish facts which, it is alleged, s/he is estopped from doing
   

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  If one party by his conduct, leads another to believe that the strict rights arising under the contract will not be insisted on, intending that the other should act on that belief, and he does act on it, then the first party will not afterwards be allowed to insist on the strict rights when it would be inequitable for him to do so
  
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    E.g. a clear representation insurance will be reinstated upon payment of back premiums without new evidence of insurability is conduct stopping insurer from denying coverage once the premiums are paid
    
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    E.g. late payment of premiums that is perceived to be customary by insured
    
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  There must also be detrimental reliance by the representee
  
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    i.e. where it would be inequitable for the promisor not to be bound by the promise to refrain from enforcing strict rights under the contract
    

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  Customer will not have to comply with a term of the contract if they can show that the contract has been varied by agreement with the insurer to exclude that term
  
  • 
    To be binding, this agreement must be supported by consideration from both sides
    

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  Where the insurer denies all liability under the policy and subsequently the customer fails to comply with a condition in the policy, insurer cannot later point to that failure as a ground for denying the claim
  

Chapter 6 – Creating, Renewing & Terminating Insurance Contracts

Making a Contract

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  Offer and Acceptance
  
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    Contract is based on agreement, both parties must be of one mind
    
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      At minimum, must have agreement about the definition of risk (subject matter of insurance and perils), duration of risk, the premium and amount of insurance
      
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      This agreement must be express or reasonably inferred from the circumstances
      
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    Usually customer makes offer, insurer accepts or rejects it
    
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    If acceptance contains new terms, this is a counter-offer, no contract until customer accepts the revised terms
    
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  Consideration
  
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    Customer’s main obligation under contract is to pay the premium
    
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    Under statute, where a policy has been delivered, the contract is binding as if the premium had been paid
    
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      This doesn’t apply to life insurance
      
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    Acceptance of an offer may be signified in writing or orally
    
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    An insurer cannot unilaterally create a contract and impose on the customer the obligation to pay a premium by issuing a policy
    

Renewals

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  Renewal can be the substitution of a new contract rather than an extension of the old one
  
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  Where insurance contract merely requires unilateral action of customer for it to be extended, typically insurer who makes offer and customer accepts
  
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  There are some circumstances where insurer may bind itself to continuing cover without customer signifying acceptance
  
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    Patterson: if an insurer in fact issues a policy or document that can be construed as a policy under the Insurance Act, the insurer cannot avoid liability on the ground that there was no contract
    
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      There is a provision in the Act which provides that a contract of insurance is binding on the insurer on delivery of a policy even if no premium has been paid
      
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      Policy in this context means documentation signifying insurer’s intent to assume obligations, even unilaterally
      

Termination

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  A contract to end the contract of insurance is marked by an exchange of value
  
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    Insurer gets excused from carrying the risk, and customer gets his/her money back
    

Replacement of the Insurer

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  Continuing insurer assumes liability under the retiring insurer’s contracts of insurance
  

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