Topic: Insurance

Disintegrating foundations caused by flowing water is gradual deterioration

By Patrick Bracher (ZA) on July 10, 2018 Posted in Insurance

A policy exclusion for damage caused by ‘gradual deterioration’ was held to exclude cover where a building had to be demolished by reason of foundations which disintegrated from flowing water. The building was built across a line of an old watercourse with seven natural springs in the vicinity and there was no proper drainage design. … Continue reading

Alleged costs to avert business interruption loss rejected (US)

By Patrick Bracher (ZA) on June 26, 2018 Posted in Insurance

In July 2012 a fire damaged equipment vital to the production of a steel pipe manufacturing plant in Arkansas. The fire was a covered peril and loss of business income and extra expenses were also covered. The court rejected the insured’s claim for an additional $14 million in mitigation costs incurred allegedly as ‘necessary expenses’ in … Continue reading

Recoverable car hire charges while vehicle repaired (UK)

By Patrick Bracher (ZA) on June 26, 2018 Posted in Insurance

When a car is hired whilst a vehicle damaged in an accident is being repaired the claimant is only entitled to the lowest reasonable basic hire rate of a reputable local car hire company. The cost of the collision damage waiver is also allowed. The plaintiff’s Jaguar XJ Supersport V8 was damaged in an accident … Continue reading

Action over stolen trade secrets does not fall under defamation cover (US)

By Patrick Bracher (ZA) on June 20, 2018 Posted in Insurance

A US company was sued for misappropriating trade secrets relating to a medical device and poaching a number of employees. The company was insured in terms of an advertising and personal injury section of its commercial general liability policy, and it attempted to allege that there was a claim for implicit defamation obliging the insurers … Continue reading

All-Risks policy does not cover non-existent cargo

By Patrick Bracher (ZA) 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 (ZA) 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 (ZA) 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 (ZA) 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 (ZA) 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 (ZA) 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 (ZA) 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 (ZA) 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 (ZA) 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 (ZA) 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 (ZA) 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 (ZA) 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 (ZA) 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 (ZA) 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 (ZA) 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 (ZA) 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 (ZA) 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 (ZA) 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 (ZA) 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