Insurance Law Monthly

In Nand v Tower Insurance Ltd [2016] NZHC 1455, which proceeded on assumed facts, property insurers sought summary judgment on a claim for fire damage caused by the assured’s son. The basic question was whether the policy covered damage caused by a third party, and that depended upon the meaning of the word “You” in the policy.

In Versloot Dredging BV and Another v HDI Gerling Industrie Versicherung AG and Others (The DC Merwestone) [2016] UKSC 45, the Supreme Court had to determine whether underwriters were entitled to reject a genuine claim under an insurance policy because the insured shipowners had told a lie (which was ultimately immaterial to the underwriters’ liability) in the course of the investigation of the claim. The case is discussed by David Turner QC of 4 New Square.

The decision of Belinda Ang J in the High Court of Singapore in Grace Electrical Engineering Pte Ltd v EQ Insurance Co Ltd [2016] SGHC 233 is a useful illustration of a series of points relating to the operation of liability policies, in particular the creation and scope of conditions precedent.

In December 2002 the EU adopted European Parliament and Council Directive 2002/92/EC on insurance mediation, replacing an earlier recommendation to member states. The Directive laid down minimum standards for insurance intermediaries, thereby allowing the development of a single market for cross-border trade. The Directive was implemented in the UK by changes to the Financial Services and Markets Act 2000 and the underlying secondary legislation, in particular the Handbook issued by the Financial Conduct Authority.

Under the Road Traffic Act 1988 it is compulsory for a person using a vehicle in the UK to be insured against liability to third parties. In the event that loss or injury is inflicted on a third party, there are various statutory mechanisms whereby the third party can bring proceedings against the assured’s insurers. An issue that is still largely unresolved is the extent to which policy exclusions can be relied upon by an insurer in third-party proceedings.

In Cape Distribution Ltd v Cape Intermediate Holdings plc (No 2) [2016] EWHC 1119 (QB) Picken J has, in a further judgment on preliminary issues, tackled some of the complex problems left unresolved by the recent spate of Supreme Court decisions on insurance coverage for mesothelioma liability.

The terms of insurance policies to be taken out by solicitors are laid down in the “Minimum Terms and Conditions” approved under the Solicitors’ Indemnity Insurance Rules. Those Rules permit an exclusion for trading losses. The distinction between professional indemnity and trading losses has been clarified by the Supreme Court in Impact Funding Solutions Ltd v AIG Europe Insurance Ltd [2016] UKSC 57, overturning the decision of the Court of Appeal, [2015] EWCA Civ 31.

Directors and officers policies typically draw a distinction between liabilities incurred by directors in their capacity as directors, and liabilities incurred by directors in some other capacity. The latter are excluded, and are typically insured under separate professional indemnity cover. The demarcation line was considered by Rebecca Ellis J in the High Court of New Zealand in Trustees Executors Ltd v Fund Managers Canterbury Ltd [2016] NZHC 2194.

The Supreme Court of New Zealand in Prattley Enterprises Ltd v Vero Insurance New Zealand Ltd [2016] NZSC 158 has again addressed the problem of successive losses in the same period of insurance. In Ridgecrest New Zealand Ltd v IAG New Zealand Ltd [2014] NZSC 129 the Supreme Court rejected the marine insurance concept of “merger”, whereby unrepaired partial losses merge into a subsequent total loss in the same policy year, and held that the assured was entitled to recover for damage inflicted by each successive earthquake even though that damage had not been repaired for which no expenditure had been incurred.