Operative Clause
The Operative clause in an insurance policy sets outs the circumstances that must be present before an insurance company will pay out any claims to insured parties. This clause is therefore very important as it forms the essence of the policy contract and details the scope of the cover.
The Operative clause will stipulate the insurer’s obligations; one can refer to it as the insurance company’s promise to the insured. It will include words to the effect of “subject to the terms, conditions, limitations and exclusions set out in the policy, and upon prior receipt of the premium, the insurer undertakes to indemnify the insured against any loss or damage in case of the occurrence of an Insured Event.” The insured event in the case of car insurance could be the car being stolen or damage suffered after an accident.
It will also set out the insured parties obligations in terms of the contact, including the payment of the premiums on the specified times. In insurance the onus is on the insured to provide proof that a loss did take place, following the general rule of the law of evidence and procedure. This rule is applied throughout the policy, including in the operative clause.