Under a comprehensive policy a firm of contractors insured a motor lorry with certain underwriters against third party risks, damage by accident, fire, and theft. The policy provided that the proposal should be the basis of the con-tract and be held as incorporated therein, and it contained a ‘condition’ printed on its back that ‘material misstatement or concealment of any circumstances by the insured material to assessing the premium or in connection with any claim shall render the policy void.’ In the proposal in answer to the question ‘State full address at which the vehicle will usually be garaged’ the proposers answered ‘Above address,’ the ‘above address’ being their ordinary business address in Glasgow, the buildings of which were stone and were known to the underwriters’ agent. As a matter of fact the lorry was garaged at a farm steading within the municipal boundary, but some miles away, in a shed built mainly of wood, and accommodating, in addition to the car, petrol lorries belonging to the proposers and some barrels of oil or petrol. A fire broke out and the shed and insured lorry were destroyed. The proposal was signed by the proposers, but contained no declaration by them as to the truth of the answers. In an action at the instance of the contractors against the underwriters for the amount of the insurance, in which a proof was taken, the Second Division on a reclaiming note held the policy void on the ground that the answer to the fourth question contained a misstatement material to assessing the premium. Held (affirming that judgment, diss. Viscount Finlay and Lord Wrenbury) that the policy was void, but, varying the judgment, that the fact that the proposal was made the basis of the contract made the answers thereto fundamental, and that an untrue answer made the policy void whether it was material from the ordinary business standpoint or not.
Observations per Viscount Haldane on the doctrine of warranty in contracts of insurance.
Observed per Viscount Cave that the fact that parties had agreed that certain statements should form the ‘basis’ of a contract showed that they deemed them material to the contract.
Judges:
Viscount Haldane, Viscount Finlay, Viscount Cave, Lord Dunedin, and Lord Wrenbury
Citations:
[1922] UKHL 509, 59 SLR 509
Links:
Jurisdiction:
England and Wales
Insurance
Updated: 26 March 2022; Ref: scu.632806
