In a recent decision of the English High Court, the court held that the non-compliance of an insured with conditions excused the insurer from liability in its policy with its insurer, including those relating to the notification and investigation of a claim.

The liability of the insurer for the claim, brought by a third party who allegedly suffered a significant gastrointestinal illness after consuming a meal at the insured’s restaurant, depended  on the insured being entitled to indemnification under the policy.

The policy conditions of particular relevance required the insured (1) to take take all reasonable precautions to prevent or diminish loss, destruction, damage or injury; (2) on the happening of any event or circumstance which could give rise to a claim by the insured under the policy or on receiving verbal or written notice of any claim to give notice as soon as reasonably possible to the insurer; (3) at their own expense to supply full details of the claim in writing to the insurer together with any evidence and information that may be reasonably required by the insurer for the purpose of investigating or verifying the claim, within 30 days of the event or circumstances or other request from the insurer; and (4) to provide all help and assistance and cooperation required by the insurer in connection with any claim. It was a condition precedent to the insurer’s liability that the insured observe the terms of the policy so far as they relate to anything to be done or complied with.

The court held that the purpose and effect of the relevant conditions in the policy was to enable the insurer to make timely investigation of the nature and genuineness of the claim and to control any proceedings to the mutual advantage of the insurer and insured.

The court concluded that an e-mail from the third party to the insured on 29 November 2019 stating that she had contracted a bacterial infection after eating at the insured’s restaurant on 26 July 2019, had been severely unwell and had had her bowel removed amounted to a “circumstance which could give rise to a claim” triggering the notification requirement under the policy. The court reached this conclusion based on the objective “reasonable person” test, namely whether a reasonable person with the knowledge of the insured and of the circumstances would have realised that the risk that a claim might be brought was real and that there was an obligation to notify.

The consequent requirement on the insured to notify the insurer “as soon as is reasonably possible” was held by the court to require that the occurrence which may result in a claim be reported by the insured as soon as reasonably possible after the insured learnt of the occurrence. The insured only gave notification of the claim on 17 November 2020, almost a year after the third party’s e-mail of 29 November 2019. In the court’s view this did not equate to action taken as soon as reasonably possible.

Whilst the court found that the insured’s breach of this condition precedent alone was sufficient for the insurer to decline to indemnify the insured, and to accordingly exclude the insurer’s liability for the third party’s claim, the court held that the insured’s failures to supply evidence and information required by the insurer for the purpose of investigating the claim and respond to requests for information from the insurer’s claims handlers amounted to further breaches of conditions precedent under the policy.

Finally, surprisingly, in the court’s judgment, the taking of “all reasonable precautions to prevent or diminish loss, destruction, damage or injury” in the context of an insurance policy encompasses the engagement by an insured with its insurer, including timeous notification of claims, supplying evidence and information and responding to requests by the insurer for the same, as well as the provision of help, assistance and cooperation in connection with a claim.

The right to reject the claim was aided by the fact that the policy conditions were conditions precedent to liability. The consequence of non-compliance with policy terms should be spelt out.

Archer v R N F Catering Ltd (t/a Biplob Restaurant) & Another