Topic: Insurance

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Covid-19 claim rejected because of virus exception (US)

A Kentucky US district court rejected the business interruption insurance claim of a retail business specialising in sale of outdoor sportswear and equipment for losses suffered as a result of government restrictions following the outbreak of Covid-19. The all-risks policy covered physical loss and damage but excluded damage caused directly or indirectly regardless of any … Continue reading

Insurance policies and absolute and relative warranties

In South African insurance law a warranty is usually a condition precedent to inception or continuation of cover or payment of a claim.  The consequence of breach or non-fulfilment is that there is no obligation on the insurer to indemnify the insured. Warranties may be absolute or relative. An obligation requiring that a certain state … Continue reading

Business Interruption Insurance and the absence of Damage

A claim under a business interruption policy generally requires a valid claim under the material damage section of the policy.  And the damage must occur during the currency of the policy. In TKC London Limited v Allianz Insurance PLC [2020] EWHC 27 10 (Comm.), the insured operated a café in London.  Following the Covid-19 outbreak of … Continue reading

Policy interpretation – “interruption”

The United Kingdom Supreme Court, in the FCA Test case appeal, dealt with the meaning of “interruption” in a Business Interruption policy. The policy wording required there to be losses resulting from “an interruption to your activities…” The court held that the ordinary meaning of “interruption” is quite capable of encompassing interference or disruption which … Continue reading

Subrogated claim against fire-causing students rejected because students were insureds (US)

The insurer was denied the right to sue two former college students for $4.5 million the insurer had paid to the school after the students accidentally set fire to the dormitory.  It was held that the students accommodated in dormitories were equivalent to tenants and insured under the school’s fire policy. The two students used a … Continue reading

Policy interpretation – prevention of access

The United Kingdom Supreme Court in the FCA Test Case appeal dealt with the meaning of “prevention of access” in respect of the prevention of access due to the actions or advice of the local authority because of an emergency which is likely to endanger life or property in a Business Interruption policy. The relevant … Continue reading

Policy interpretation – “inability to use”

The FCA Test Case appeal in the UK Supreme Court dealt with the meaning of “inability to use” business premises in the relevant non-damage extensions to the business interruption section of the policy considered by the court. The relevant non- damage Public Authority clauses did not cover all business interruption due to “restrictions imposed” by … Continue reading

124 food poisoning claims is one ‘occurrence’ (US)

A Texas district court held that 124 claims for food poisoning from salmonella bacteria suffered by patrons at a restaurant was one ‘occurrence’ within the terms of the restaurant’s insurance policy. An occurrence was defined as ‘an accident including continuous or repeated exposure to the same general harmful conditions’. An occurrence was ‘an accident’ and … Continue reading

Claim for loss of use of building precluded by ‘impaired property’ exclusion (US)

A conveyor company failed in its claim against its insurers for a loss arising from the supply of a defective cookie packaging machine to a biscuit manufacturer because the policy specifically excluded coverage for “impaired property”.  The claim by the biscuit manufacturer against the insured alleged that they were unable to use their new building … Continue reading

New York regulator issues a cyber-insurance risk framework

Concerned about pandemic-related extra cyber activity, the rise in ransomware and recent cyber-espionage campaigns, the New York State Department of Financial Services (DFS) issued a cyber-insurance risk framework on 4 February 2021. After describing the risks for insurers and concluding that insurers play a critical role in mitigating and reducing the risks of cyber-crime, the … Continue reading

Interpreting insurance contracts (part 7 – causation)

An insured loss must be caused legally and factually by the insured peril. Even where factual causation is established legal causation does not automatically follow. In Concord Insurance Co Limited v Oelofsen N.O. (1992) the court said that in the contractual context policy considerations do not enter the enquiry (unlike in criminal law or delict, … Continue reading

Interpreting insurance contracts (part 6 – objective interpretation)

The interpretation process is objective, not subjective. Where the meaning of any policy is clear, effect must be given to it. The court cannot substitute what it regards as reasonable, sensible or business-like for the words actually used. The court should not in those circumstances rewrite the contract made by the parties. Courts should not ‘make … Continue reading

COVID-19 is not insured ‘pollution’ (USA)

An American court has held that an insurer’s ‘premises pollution liability’ policy only covers environmental pollution and not the COVID-19 outbreak. Because COVID-19 is a type of virus it does not constitute traditional environmental pollution. The court said that the policy only covers pollutants commonly thought of as environmental pollution. The insured had argued that … Continue reading

Tacit agreement on intermediary commission

Despite there being no explicit agreement on the amount of an intermediary’s commission, the client’s consent to payment of the commission may arise from the circumstances rather than an express agreement. A recent English case (on solicitors’ fees but pertinent here) points out that informed consent to pay commission may arise when the client knows … Continue reading

D & O insurance and reflective loss claims

At common law when a wrong is done to a company only the company can sue for the damage caused to it. That does not mean that the shareholders of the company may not consequentially suffer any loss (what is known as a reflective loss). Any negative impact the wrongdoing has on the company is … Continue reading

COVID-19 infectious disease extensions and the FCA test case

The English high court, in a test case between the Financial Conduct Authority and Arch Insurance (UK) Limited and a number of other insurers, engaged in a nuanced analysis of their different policy wordings relating to business interruption cover for COVID-19 related losses. The court largely sought to resolve causation issues by interpreting each policy. … Continue reading

Insurance policy interpretation contra proferentum – armed robbery, theft and hijacking

The Gauteng High Court considered what constitutes armed robbery, theft and hijacking as indemnifiable events under an insurance policy in Anabella Resources CC v Genric Insurance Company. The policy did not contain a definition of armed robbery and the definition of theft and hijacking required ‘actual lawful control’ by the insured or its employees of … Continue reading
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