The basis for contractual insurance liability is actual consensus supported by the insureds’ and the insurers’ serious intention to be legally bound to what they have agreed to.
There is no consensus if there is a material mistake relating to the identity of the parties to the insurance contract, or the object of the risk, or the performance undertaken by each party, according to the terms of the insurance contract.
There may be a genuine mistake in that the parties are under the impression that consensus had been achieved but in fact there was no consensus.
A material mistake excluding consensus exists where there is a mistake for example about the existence of the property to be insured. The mistake is material if it affected the party’s decision to agree. The fact that one of the parties would have contracted on the same terms even if the true state of affairs had been known is immaterial.
A material mistake exists where the insured requests insurance for a particular property which it no longer owns or bears a risk in. That happens for example where in the first period of insurance the insured insures property it owns, then disposes of the property, and then in subsequent renewals the property remains listed as insured where the insured had no intention of continuing to insure property in which it no longer bore any risk.
In those circumstances the policy is void. Any performance under the void policy must be returned. So the insured is entitled to return of the premiums paid.
The claim for return of premiums is subject to the normal laws and rules of prescription. If an insured belatedly claims return of premiums, the claim may have prescribed.