Topic: Insurance

Business Interruption Insurance and the absence of Damage

By Donald Dinnie on April 6, 2021 Posted in Insurance

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”

By Donald Dinnie on March 31, 2021 Posted in Insurance

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)

By Patrick Bracher (ZA) on March 29, 2021 Posted in Insurance

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

By Donald Dinnie on March 29, 2021 Posted in Insurance

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”

By Donald Dinnie on March 26, 2021 Posted in Insurance

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

An independent cleaning contractor does not assume a shopping mall owner’s duty of care

By Siyabonga Mathe on March 9, 2021 Posted in Insurance

The duty to take reasonable steps to ensure that a shopping mall is reasonably safe, falls on the owner or any person who may be in control of the premises. The appointment of an independent cleaning contractor, does not entitle the owner or the person in control to avoid liability for claims which arise as … Continue reading

Insurer not required to pay for medical marijuana (US)

By Patrick Bracher (ZA) on March 3, 2021 Posted in Insurance

The Massachusetts Appeals Court refused to order an insurance company to pay for the medical marijuana expenses to treat the claimant’s pain stemming from a work-related injury he sustained in 2014. The US situation is curious in that medical marijuana is allowed in some states but is still unlawful under federal law. The Massachusetts law … Continue reading

Payment to broker may not be payment to insurer (US)

By Patrick Bracher (ZA) on February 10, 2021 Posted in Insurance

The Georgia Court of Appeals (US) found that payment of premiums by house owners insurance policyholders to their insurance agent was not payment to the insurer where notice had been given to the policyholders to pay directly to the insurer. In October 2014, the insurer sent a renewal notice to the policyholders requiring them to … Continue reading

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

By Patrick Bracher (ZA) on February 10, 2021 Posted in Insurance

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)

By Patrick Bracher (ZA) on February 10, 2021 Posted in Insurance

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

By Patrick Bracher (ZA) on February 9, 2021 Posted in Insurance

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

Application of the bump-up exclusion in a D&O policy (US)

By Patrick Bracher (ZA) on January 27, 2021 Posted in Insurance

The bump-up exclusion in a D&O policy excluded claims ‘alleging that the price paid … for the acquisition … of an entity is inadequate’. The insurers do not have to pay any amount due under a judgment or settlement representing the amount by which the price or consideration would be effectively increased. This is to … Continue reading

Interpreting insurance contracts (part 7 – causation)

By Donald Dinnie on January 22, 2021 Posted in Insurance

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)

By Donald Dinnie on January 12, 2021 Posted in Insurance

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)

By Donald Dinnie on December 11, 2020 Posted in Insurance

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

No insurance cover because of exclusion of contract-based claims (US)

By Patrick Bracher (ZA) on December 9, 2020 Posted in Insurance

The insured was sued for and settled a claim for $77.5 million under the California False Claims Act for overcharging California government entities under the terms of particular contracts despite their offer of low prices to the government. The insured sued the insurer for an indemnity for its loss. The court denied the claim on … Continue reading

Tacit agreement on intermediary commission

By Patrick Bracher (ZA) on December 2, 2020 Posted in Insurance

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

The contra proferentem rule and insurance policies – again

By Donald Dinnie on November 19, 2020 Posted in Insurance

The application of the contra proferentum rule was one of the issues which the English High Court considered in Financial Conduct Authority v Arch Insurance (UK) Limited and Others. The rule provides that where there is doubt about the meaning of a contract, the words will be construed against the person who proffered them. The … Continue reading

D & O insurance and reflective loss claims

By Donald Dinnie on November 16, 2020 Posted in Insurance

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

By Donald Dinnie on November 12, 2020 Posted in Insurance

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

By Donald Dinnie on October 5, 2020 Posted in Insurance

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

COVID-19 insurance: closure orders are not physical loss (USA)

By Donald Dinnie on August 25, 2020 Posted in Insurance

An American court has confirmed that government shutdown orders did not constitute ‘direct physical loss’ that would trigger an indemnity under the commercial insurance held by a group of restaurants (in Rose’s 1 LLC et al v Erie Insurance Exchange). The court said that: insurance policies are to be enforced in accordance with the real … Continue reading

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

By Patrick Bracher (ZA) on August 16, 2020 Posted in Insurance

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

Interpreting insurance contracts: a refresher (part 5 – fairness and reasonableness)

By Donald Dinnie on August 6, 2020 Posted in Insurance

A court may not refuse to enforce contractual terms on the basis that the enforcement would, in its subjective view, be unfair, unreasonable or unduly harsh. It is only where a contractual term or its enforcement is so unfair, unreasonable or unjust that it is contrary to public policy that a court may refuse to … Continue reading