Lloyd's Maritime and Commercial Law Quarterly

The effect of subsequent increases of risk on contracts of insurance

Marcus Smith *

Although it is a well-established rule of English law that an increase in the risk insured occurring after a policy of insurance has been concluded has no effect on the insurer’s obligations, it has been suggested that there is a limited exception to this general rule, whereby an insurer may either be discharged or otherwise not obliged to pay by reason of a subsequent change in circumstances. This article explores the general rule, and the extent and nature of the exception to it. It will be suggested that there is no real exception to the general principle, and that an insurer can only rely upon a subsequent change in circumstance if, as a matter of construction, the policy permits him to do so.


Whether an increase in the risk insured occurring after a policy of insurance has been agreed has any effect on the insurer’s obligations under the policy is a question of some difficulty. The leading texts agree that, as a general rule, post-contractual increases in risk have no effect on the insurer’s obligations,1 a point that is supported by considerable authority.2 However, a number of texts (although not all3) assert that there is an exception to this general rule. There is little case law to support the existence of such an exception, and (if the exception exists at all), it is an ill-defined one. Thus, McGee4 devotes a chapter



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