Insurance Underwriting – Non-UK (WUE) Practice Exam

Timing requirements for claims, like prompt submission, create a condition precedent to liability. In an insurance contract, the insurer’s obligation to pay only arises once certain prerequisites are met, and a prompt-notice clause is one of those prerequisites. If the insured fails to submit the claim promptly as required, liability may not attach, and the insurer can deny or limit payment even if the loss is covered. This is different from a warranty, which is a promise about the risk itself; breaching a warranty can void coverage from the moment of breach, regardless of when a claim is filed. It’s also distinct from a representation, which is a stated fact used to obtain the contract and can affect the contract’s validity or terms if false. While the clause may be expressly stated in the policy, its function in practice is to determine whether the insurer’s liability exists in the first place, making it a condition precedent to liability.