Illustrate the features of insurance policies

Question

Illustrate the features of insurance policies?

Answer 1

All provinces have passed legislation to require certain mandatory terms in an insurance policy as well as to suggest terms that may be included at the option of the parties. Although insurance policies are based on the ordinary law of contracts, they have certain unique features:

1. An offer is made by the proposed insured in his application. Acceptance is made by the insurer upon issuing the policy, unless interim arrangements are agreed upon between the parties to affect their earlier coverage.

2. A policy of insurance ends upon the expiry of its term unless renewed specifically or in accordance with the intentions and past dealings of the parties.

3. For reasons of public policy, claims arising out of criminal or tortious acts (except claims arising under negligence insurance) will generally not be enforced.

4. Ambiguous standard form provisions will be interpreted strictly against an insurer because it is the insurer who drafted the clauses in question.

5. An insured owes a duty of utmost good faith to provide full, true, and complete disclosure of all material facts affecting the risk, failing which the insurance contract is voidable by the insurer.

6. Where an insured is reimbursed for a claim by the insurance company, the insurer steps into the shoes of the insured (subrogation) and has the right to sue any third party.