Remedy under Law of Insurance

Insurance are often viewed as a normal contract with involved a seller and a buyer in exchange of a service, a service which will compensate the buyer if anything were to happen to the insured object either to the insured’s health or item. If a breached of contract were to occurred, the buyer or seller can just simply rescind the contract.

However, the law of insurance is not as simple as it appears. There are actually three types of remedy available and that is to rescind the contract, avoidance for non-disclosure and the doctrine of Subrogation. Rescind of contract is very much common and it merely involve the termination of contract.

The law gets more complicated with the second and third remedy. Non disclosure is a very drastic remedy. If the insurers find out that the insured had failed to disclosure any relevant information which might effects the premium, then the insurers can disclaim their liability and leaves the insured without any protection which he thought he had contracted for. For example in the case of Wootcott v Sun Alliance, Wootcott had insured his house to Sun Alliance. Unfortunately, the house was damaged by the fire but the claim was rejected. The insurer has refused payment on the basis of non disclosure on the part of Wootcott in failing to disclose his past conviction for robbery and other offences. The court held that it was a valid disclaimer.

The third remedy available is the Doctrine of Subrogation. This doctrine has a couple of effects; Firstly, the insured cannot receive more than he is accountable for. Secondly, the insurer may sue any third party who is liable to the insured for the loss in action for tort of contract. The insurance company is entitled to do so for standing in the shoe of the company and sue the third party if he had negligently caused damage. A case on point will be the case of Lister v Romford. Lister, a lorry driver employed by Romford Ice Company negligently injured his father when reversing his lorry. As a result, the company’s insurer paid the damages to the father but then later on sued Lister in the name of Romford. The court held that Lister has breached the employment term for being driving recklessly which eventually cause an accident to his father. Therefore, the insurer can step in the shoes of the insured and benefit from the doctrine.