INSURANCE LAW 1.4 WARRANTIES AND CONDITIONS
Under the general law of contract, conditions are the fundamental terms which go to the root of the contract while warranties are collateral promises. Under insurance law, the reverse is the case.
Warranty: Attesting to the veracity of statements/answers made or where the proposer undertakes/promises to perform an obligation specified in the policy… or where the policy is endorsed. In Akpata V African Aliance Co the court noted that warranty requires strict compliance else the innocent party can avoid the contract.
Conditions: do not affect the validity of a contract of insurance. They deal with issues affecting the rights of the parties after the loss has occurred. A condition may be made precedent by clear and unambiguous words. E.g. condition requiring notice within 7 days from the occurrence of the insured peril. At claw, breach of condition precedent may entitle the insurer to avoid. However, Section 55 of the Insurance Act is to the effect that breach of a condition does not entitle the insurer to repudiate/avoid liability except it involves a fundamental term or the breach amounts to a fraud (Derry V Peek). The Section defines a fundamental term as that which a prudent insurer would regard as material and relevant in accepting to underwrite a risk. This seems to take us back to the claw position of prudent insurer as discussed above.