An insurance policy in the UK provided cover against the risks of insolvency or defective work on the part of the builder. The policy misstated the name of the main contractor as TT Construction instead of TT Bedford.
When TT Bedford went insolvent the insured sought an indemnity from the insurers for the losses incurred as a result of TT Bedford’s insolvency.
Under South African law it is also necessary to describe the parties accurately and the risks accurately.
The court held that it was a contractual term between the parties that TT Construction should be and remain the builder. The insurers were providing cover against the risks on the part of an identified builder. They were not providing cover for the defaults of any other builder. The losses were not covered under the policy. A statement in the proposal form that the information given by the insured was correct and complete was held to be a contractually binding term.
The policy also contained a misrepresentation clause according to which the policy “will be voidable in the event of misrepresentation, misdescription, error, omission or non-disclosure by the policyholder with intent to defraud”. The insured sought to argue that the clause meant that a misrepresentation with no intent to defraud would not be a basis for avoiding the contract. The court found that the condition was not a limiting provision. It did not say that the policy would be voidable only in the circumstances mentioned.
The result would be the same under South African law. It is necessary to describe the parties accurately and the risks accurately in the schedule (see Lombard Insurance v Landmark Holdings).