Topic: Insurance

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Asbestos exclusion upheld in US

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

Additional insureds you have agreed to insure (US)

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)

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)

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

Ambiguous limits of indemnity (UK)

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

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

UK parliament criticises insurance regulator for inflexible solvency requirements

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

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

Two bridge collapses from same design flaws are ‘related claims’ (US)

A number of lawsuits were pursued against an engineering design firm when two pedestrian bridges collapsed on 13 and 14 November 2014 causing death and damage. The court held that these were ‘related claims’ as defined in the engineering firm’s professional indemnity policy. The policy provided that ‘all related claims shall be considered a single claim’. … Continue reading

Subrogation summarised (UK)

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

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)

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)

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?

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?

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
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