Conditions precedent in insurance policies

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Conditions precedent are contractual terms often found in insurance contracts. It is important to distinguish conditions precedent from bare conditions (also known as conditions subsequent) as the consequences following breach of each are different.

A breach of a condition precedent in an insurance contract may allow insurers to avoid paying out under a claim regardless of whether they have suffered any prejudice as a result of the breach. Alternatively it may mean that cover never attaches in the first place so that the insurer is never in risk.

Given the consequences which follow from a breach of condition precedent it is important to phrase terms as bare conditions wherever possible. Policyholders should consult with their insurance broker to ensure that conditions precedent are kept to a minimum in their policies.

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