Topic: Insurance

All-Risks policy does not cover non-existent cargo

By Patrick Bracher on June 19, 2018 Posted in Insurance

The English High Court held that an all-risks marine cargo and storage insurance policy did not cover a loss of copper ingots which were never shipped to the claimant who had in good faith paid for and taken up fraudulent bills of lading. The claimant bought 7 000mt of copper ingots for shipment to China. The … Continue reading

Asbestos exclusion upheld in US

By Patrick Bracher on June 19, 2018 Posted in Insurance

An exclusion for claims ‘arising out of asbestos’ was upheld by the US Third Circuit because it is unambiguous and therefore enforceable. The Appeal Court overturned a $36 million judgment against the insurer, which is only part of the policyholder’s liability for $120 million worth of asbestos-related claims. The court did not accept the argument that the … Continue reading

Is continuing to use ship’s engine after alarm accidental loss? (Aus)

By Patrick Bracher on June 11, 2018 Posted in Insurance

The insured pleasure craft was fitted with a diagnostic system and a critical alarm for low oil pressure or high coolant temperature. When the alarm went off the engines automatically went into limp mode and the engine-operating manual required the engine to be switched off. The insured did not read the manual nor switch off … Continue reading

Exclusion of loss arising from arrest, restraint, detainment

By Patrick Bracher on June 4, 2018 Posted in Insurance

The UK Supreme Court examined the question whether a vessel detained in Venezuela as a result of being used by a drug cartel to smuggle cocaine strapped to the hull fell within the exclusion for ‘arrest, restraint, detainment, confiscation or expropriation … by reason of infringement of any customs … regulations’. The owners of the … Continue reading

Insurers do not have to indemnify lawyer for overbilling claim (US)

By Patrick Bracher on May 31, 2018 Posted in Insurance

A property foreclosure attorney was sued in a class action for overbilling a group of property owners. The lawyer sued his PI insurers to oblige them to defend him against the class action. He lost. The court found that the policy did not create a duty to defend because the allegations had arisen from billing … Continue reading

Cocaine planted on ship by smugglers not an insured ‘malicious act’ (UK)

By Patrick Bracher on May 27, 2018 Posted in Insurance

Unknown third parties strapped bags of cocaine to the hull of a vessel leaving Venezuela resulting in the detention of the ship for more than six months and therefore a constructive total loss. The UK Supreme Court ruled that the loss did not result from ‘any person acting maliciously’. In the context of a clause … Continue reading

Additional insureds you have agreed to insure (US)

By Patrick Bracher on May 27, 2018 Posted in Insurance

A US construction insurance policy included provision for an additional liability insured as ‘any person or organisation with whom you have agreed to add as an additional insured by written contract’. It was held the policy did not cover a project architect with whom there was no such direct written contract. Because the endorsement included … Continue reading

Application of insolvency exclusion (UK)

By Patrick Bracher on May 22, 2018 Posted in Insurance

Where a professional indemnity policy excluded claims ‘arising out of or related directly or indirectly to the insolvency of the insured’ the court absolved the insurer from liability in a claim by a financial management company that had lost money on a £200 000 investment when the issuer of a bond went insolvent. The court held … Continue reading

Settlement not authorised by insurers is not an occurrence (Australian case)

By Patrick Bracher on May 14, 2018 Posted in Insurance

A refurbishment contract entered into by the insured led to arbitration which the insured settled without the insurer’s authority on the basis of a ‘cap and collar’, capping the award if the claimant was successful and agreeing to a payment of USD2 million if the claim failed. The claim failed and the insured claimed the USD2 million … Continue reading

Insurance of ‘damages’ does not include statutory penalties (US)

By Patrick Bracher on May 14, 2018 Posted in Insurance

The insured failed in an attempt to get an indemnity under a liability policy covering ‘damages’ for statutory damages sought by the Federal Trade Commission. The insured had made telephone calls in breach of the Telephone Consumer Protection Act (TCPA) to numbers on the National Do Not Call Registry. The FTC asked for statutory damages … Continue reading

Ambiguous limits of indemnity (UK)

By Patrick Bracher on May 13, 2018 Posted in Insurance

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 … Continue reading

Minority shareholder who dominated board held to control a company

By Patrick Bracher on May 1, 2018 Posted in Insurance

A court, asked to dismiss a claim against Tesla Motors, found it reasonably conceivable that Elon Musk, a 22.1% shareholder, was a controlling shareholder because of his ‘actual domination and control over the directors’ wielding more power than may be evidenced by the minority shareholding. Normally the courts of Delaware, where the case happened, would … Continue reading

Dependants can’t sue Road Accident Fund where breadwinner dies in single vehicle accident

By Patrick Bracher on April 25, 2018 Posted in Insurance

The surviving wife and children of a breadwinner sued the Road Accident Fund for damages when he died as a result of a single vehicle accident in which the deceased’s negligence was the sole cause of the collision. The court held that the Road Accident Fund does not provide such a remedy and no wrongfulness … Continue reading

UK parliament criticises insurance regulator for inflexible solvency requirements

By Patrick Bracher on April 25, 2018 Posted in Insurance

The UK House of Commons Treasury select committee has produced a report criticising the EU Solvency II Directive and its impact on the UK insurance industry. Solvency II is a European directive but the UK Prudential Regulation Authority was criticised for having too much regard to the industry’s solvency rather than its competitiveness in the international market. … Continue reading

‘Arising out of or in connection with’ use of land in liability insurance exclusion

By Patrick Bracher on April 23, 2018 Posted in Insurance

A New Zealand couple owned a farm in which they carried out farming activities and a landscaping business. They built and burned a fire heap on the property. Strong winds spread the embers and the fire spread rapidly onto nearby properties causing extensive damage. Their insurance policy excluded ‘legal liability arising out of or in … Continue reading

Subcontractor required to provide own insurance held not entitled to project insurance (UK)

By Patrick Bracher on April 5, 2018 Posted in Insurance

Where project-wide cover was taken out for a construction contract for extensions to a school but the roofing contractor was obliged to take out its own insurance, it was held that the roofing contractor who caused a fire and a loss of £8.75 million was not entitled to the benefit of the project-wide insurance. The facts … Continue reading

Financial Sector Regulation Act in force from 1 April 2018

By Patrick Bracher on April 3, 2018 Posted in Banking, Insurance

Most sections of the Financial Sector Regulation Act 2017 were brought into force from 1 April 2018. This step was anticipated as the first step towards the commencement of the new Insurance Act on 1 July 2018. By a two-step process the Minister was empowered in a Gazette of 29 March 2018 to make regulations, which were passed … Continue reading

Subrogation summarised (UK)

By Patrick Bracher on March 29, 2018 Posted in Insurance

A neat description of subrogation appears in a recent UK case: ‘The concept of subrogated rights is well known. If a party is insured against an insured risk, and that risk eventuates and causes loss, the insurer will make good to the insured party the loss suffered as a result of the occurrence of the … Continue reading

Short-term Insurance Act 1998: Proposed amendments to the regulations made under section 70 affecting premium collection

By Patrick Bracher on March 26, 2018 Posted in Insurance

New draft premium collection legislation The National Treasury has published draft regulations for comment by 23 April 2018 regarding the collection of premiums by intermediaries (short-term and long-term premiums). The draft regulations require detailed premium collection authorisations by insurers to intermediaries. The proposed regulations also require a separate bank account for premiums received and require payment … Continue reading

Interpreting insurance policies (UK)

By Patrick Bracher on March 26, 2018 Posted in Insurance

A recent UK decision made some interesting remarks regarding the interpretation of an insurance policy which should be no different in South Africa: The wording of the schedule and the policy wording must be considered together without giving greater weight to either. The fact that clearer words could have been used does not mean that … Continue reading

No cover for racing school accident even though exclusion not read by insured (US)

By Patrick Bracher on March 14, 2018 Posted in Insurance

Where a motor policy excluded coverage ‘for any vehicle located inside a racing facility for the purpose of … or participating in any driving school, driver training or skills training’ the court refused the insured an indemnity to cover a crash at a motor racecourse skills-training event. The insured crashed while he was instructing a … Continue reading

What is personal lines business?

By Patrick Bracher on February 28, 2018 Posted in Insurance

Despite objections at the comments stage, the Registrar of Short-term Insurance has defined a ‘policy’ for the purposes of the Policyholder Protection Rules as a short-term policy where the policyholder is a natural person or a juristic person with an asset value or annual turnover less than the R2 million threshold. That has ridiculous consequences. It … Continue reading

Duty of disclosure: is the refusal to renew residential policy material to a commercial policy?

By Craig Woolley on February 21, 2018 Posted in Insurance

Higherdelta Ltd was the owner of commercial properties including a restaurant in Scotland. Its company secretary, director and shareholder was also the owner of a portfolio of residential properties. The non-disclosure of prior events relating to the personal portfolio was held not to be relevant to underwriting the business policy. The restaurant was added to … Continue reading