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Understanding

The Contract

18 April 2023

Last revised

minutes

3

Reading time

While your broker should understand and be able to explain policy terms to you, there can be ambiguity as to the role played by intermediaries. If you’re going to do your utmost to make sure that you remain covered, you need to be clear about the insurance contract itself, beyond deductible amounts. Underwriters are in business to make money and, despite marketing to the contrary, can and will fight larger claims.

minutes

3

Reading time

18 April 2023

Last revised

While your broker should understand and be able to explain policy terms to you, there can be ambiguity as to the role played by intermediaries. If you’re going to do your utmost to make sure that you remain covered, you need to be clear about the insurance contract itself, beyond deductible amounts. Underwriters are in business to make money and, despite marketing to the contrary, can and will fight larger claims.

  • Where there's a dispute, ambiguous terms in a policy are construed in favour of the insured .

  • Consumer protection may vary based on whether the insured uses the yacht privately or commercially.

  • Insurance contracts consist of four types of terms: terms descriptive of the risk, exclusions, warranties, and conditions.

  • Breach of warranty can release the underwriter from future liability or suspend coverage, while breach of a condition can lead to liability rejection or claims for damages.

  • Terms descriptive of the risk define the perilscovered , and the insured must prove that the loss resulted from one of these perils.

  • Exclusions limit the scope of coverage and suspend cover during the excluded circumstances.

  • Warranties are fundamental terms that must be strictly followed, regardless of whether they are labeled as such.

  • Conditions can be either conditions precedent (before coverage) or bare conditions (during the policy), and breach can result in different outcomes.

  • The insured party must have an insurable interest in the matter being insured, typically the owner of the yacht.

  • Other interested parties must be declared in the contract and can be entitled to notifications, but to claim directly, they need to be named as joint or co-insureds.

  • Exclusions limit the scope of coverage and suspend cover during the excluded circumstances.

  • Warranties are fundamental terms that must be strictly followed, regardless of whether they are labeled as such.

  • Conditions can be either conditions precedent (before coverage) or bare conditions (during the policy), and breach can result in different outcomes.

  • The insured party must have an insurable interest in the matter being insured, typically the owner of the yacht.

  • Other interested parties must be declared in the contract and can be entitled to notifications, but to claim directly, they need to be named as joint or co-insureds.