NAME: SOLOMON EZERA UKPAI

MATRIC NUMBER: 20080100037

LEVEL: 300L

COLLEGE: COLLEGE OF LAW

DEPARTMENT: LAW

COURSE: INSURACE LAW

QUESTION
In International Bank of West Africa v. Crusaders Insurance
Policy, the premium was not paid as when due, the policy had lapsed
when a purported premium was remitted and the car had an accident.
Advice the parties.
ANSWER
ISSUE: Whether or not the insurer is obligated to provide coverage for a
loss when the premium payment was not made on time and the policy had
lapsed?

RULE: Under Nigerian insurance law, if a premium payment is not made on

time and the policy lapses, the insurer is generally not obligated to provide
coverage for any losses occurring during the lapsed period.
The case of Tectonics International Inc. v. Millers' Mutual
Insurance Association of Illinois (2013), the court ruled that a
premium payment made after the policy had lapsed did not retroactively
reinstate coverage. The insured attempted to make a payment after a loss
occurred, but the court held that the insurer was not obligated to provide
coverage for the loss that had taken place during the lapsed period.

APPLICATION: When an insurance policy lapses, it means that the

coverage under the policy has ceased due to non-payment of the premium
within the specified grace period or as outlined in the policy terms. Once
the policy has lapsed, the insurer is typically not obligated to provide
coverage for any losses or events occurring during the lapsed period.
In some cases, a premium payment made after the policy had lapsed could
be accepted by the insurer as a reinstatement of the policy. However, the
acceptance of the late payment is subject to the insurer's discretion and
whether there is any prejudice to the insurer as a result of the late
payment. Confer the case of Pritchard v. Co-operative Insurance
Society Ltd (2001).
In the present case, the premium payment was not made on time,
resulting in the lapse of the policy. As a consequence, the insurer may
argue that they are not obligated to provide coverage for the loss that
occurred during the lapsed period.
In the case of Gebhart v. Allstate Insurance co. (1990), the court held
that a premium payment made after the policy had lapsed did not
automatically reinstate the coverage. The insured's attempt to make a
payment after the policy period had expired was deemed ineffective, and
the insurer was not obligated to provide coverage for a loss occurring
during the lapsed period.
CONCLUSION: Based on the applicable rule and the specific facts of the
case, the insurer is not obligated to provide coverage for the loss, given
that the premium payment was not made on time and the policy had
lapsed.