Where a policy schedule and the wording of the policy were not on the face of it consistent, the court considered the combined effect of the limit for a single claim and a number of linked claims and held that the same £10 million applied to both.
According to the schedule, the limit of indemnity for any one claim was £10 million and in aggregate £20 million. The policy wording referred to a limit of indemnity for all claims ‘consequent or attributable to one source or original cause irrespective of the number of persons entitled to an indemnity’ and also referred to claims arising irrespective of the number of sources or original causes. The wording therefore implied two limits but there was only one claims limit in the schedule.
A breast surgeon had performed over 700 operations that were unnecessary, inappropriate and negligent. The private hospital insured agreed to accept a £26 950 000 contribution to the £37 million settlement fund and suggested that the £10 million limit only referred to one claim and not linked claims which therefore fell into the £20 million aggregate limit.
The court held that the words in the schedule must be read with those in the main body of the policy wording without giving greater weight to either.
Aggregation clauses sometimes operate in favour of the insurer and sometimes in favour of the insured and they therefore do not have to be given a broad or narrow interpretation, merely an interpretation.
The unifying factor of the two provisions was the fact that they linked the limit of indemnity for individual claims, not the total amount. Therefore the limit of £10 million applied to both linked and unlinked claims and the limit under the policy for all the linked claims was £10 million.
The case is Spire Healthcare Limited v Royal & Sun Alliance Insurance Plc.