Topic: Insurance

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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

Court applies ‘arising out of the operations’ exclusion in liability policy (US)

A Texas federal judge ruled that the insurer did not have to defend a design and construction consultant against the employer’s liability claim for a defective oil well because cover was excluded for property damage to ‘that particular part of real property on which any contractor working directly or indirectly on your behalf are performing … Continue reading

Fraudulent insurance claim denied

The insured, in an Israeli Supreme Court case, claimed under a jewellers block policy alleging he had been a victim of a violent robbery in which diamonds and cash worth approximately $11 million had been stolen. The evidence established that diamonds worth about $6 million of the claim were in the insured’s stock and had … Continue reading

COVID-19, business interruption and physical damage

In South Africa and the United Kingdom, coronavirus coverage disputes are centring around the interpretation of various non-damage extensions provided under the policy’s business interruption section. In North America, both in Canada and the United States, the focus has been whether COVID-19 caused direct physical loss or damage to the insured property triggering business interruption … Continue reading

Interpreting insurance contracts: a refresher (part 2)

An insurance contract is presumed to require that the insured peril must be the proximate cause of the insured’s loss (see Incorporated General Insurance Ltd v A.R. Shooter trading as Shooter’s Fisheries 1987). Causation involves two distinct enquiries namely factual causation and then legal causation. The test for factual causation is generally described as the … Continue reading

Cyber risk cover – the pandemic lesson

One lesson for insurers from the COVID-19 pandemic is that carefully considered wording for potentially massive losses is essential. Cyber risk can lead to such losses. Here are links to some of the articles we have written on cyber risk to remind you: Cyber risk warnings for insurers Cyber cover must be specifically provided or … Continue reading
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