Tag archives: Exclusions

Power station damaged by shocked squirrel is excluded

By Patrick Bracher (ZA) on February 6, 2019 Posted in Insurance

Where a squirrel found its way onto a power station’s electrical transformer triggering an electrical arc that killed the squirrel and caused damage to the municipality’s property of $213 524, the court denied the municipality all-risks insurance cover because of an exclusion for ‘loss caused by arcing or by electrical currents other than lightning’. The court … Continue reading

Definition of ‘explosion’ cover in breakdown policy excludes liability

By Patrick Bracher (ZA) on December 2, 2018 Posted in Insurance

A refining company claimed under its equipment breakdown insurance policy following an explosion that occurred when a segment of a pipe in a charge heater designed to refine the petroleum product naphtha burst. A 600 degree naphtha mixture was running through the pipe at more than 14 000 pounds per hour and, when the charge heater … Continue reading

Enforceability of the sanctions exception in policies (UK)

By Patrick Bracher (ZA) on November 25, 2018 Posted in Insurance

An awaited decision on the enforceability of the sanctions provision in policies of insurance heard in the UK courts has turned out to be of not much general assistance. The English High Court found that, although an insurer is not liable to pay a claim where the payment would be prohibited under EU or US … Continue reading

Insurer entitled to rely on third party expert’s conclusions (US)

By Patrick Bracher (ZA) on November 4, 2018 Posted in Insurance

A Delaware court held that a property insurer did not breach its policy issued to a farm when it refused to cover the collapse of a chicken coop during a blizzard because it justifiably relied on expert reports indicating that the destruction was caused by snow and faulty construction which were exclusions under the policy. … Continue reading

Strip club not covered for credit card theft by employees (US)

By Sandra Sithole (ZA) on September 6, 2018 Posted in Insurance

In August 2018, a US federal court ruled that an insurer did not have to cover a strip club for third party reimbursement costs arising from credit card fraud on its customers by the club’s employees because no direct loss was suffered by the club itself. The insured, a club owner, was the holder of … Continue reading

Damage arising from marijuana operations not covered by policy (US)

By Sandra Sithole (ZA) on September 3, 2018 Posted in Insurance

A US appeals court in August 2018 found that an insurer does not have to indemnify its insured for damage to a warehouse by tenants who converted it into a marijuana growing operation, finding that an exclusion in the policy for losses resulting from criminal acts precluded cover. The claim arose under the building and … Continue reading

Wrongful death claims at bar fails on assault exclusion (US)

By Sandra Sithole (ZA) on August 6, 2018 Posted in Insurance

Two US district courts in two separate cases held in July 2018 that the insurers of public bars do not have a duty to defend or indemnify the insured owners of the bars for violent deaths of patrons because of the policy exclusion for bodily injury arising from an assault, battery or physical altercation. The … Continue reading

Carbon monoxide death liability claim fails on pollution exclusion (US)

By Yash Naidoo on July 24, 2018 Posted in Insurance

Two tenants of a second-floor unit in an apartment building (condominium) in Florida USA died in their bedroom, after inhaling carbon monoxide gas whilst asleep. The gas was believed to have come from a car in the unit’s garage. It seeped into the air-conditioning system of the unit and entered the bedroom through the system’s … Continue reading

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

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

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

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

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

‘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

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

By Patrick Bracher (ZA) 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

Insurance exclusion for ‘that particular part’ on which ‘performing operations’ (US)

By Patrick Bracher (ZA) on September 19, 2017 Posted in Insurance

The insured subcontracted a builder to build 53 prefabricated modular units for its residential blindness rehabilitation facility. The insurer denied an indemnity for water damage under a partly completed roof saying that the applicable exclusion barred coverage for ‘that particular part’ of property on which the policyholder or its subcontractors ‘are performing operations’. The units … Continue reading

US court upholds Lloyd’s flood exclusion

By Patrick Bracher (ZA) on September 4, 2017 Posted in Insurance

A US court of appeals upheld the exclusion in a policy issued by Lloyd’s Underwriters for losses ‘caused directly or indirectly by flood’ in relation to a claim where a river basin marina lost five of its docks in a storm which generated strong winds and 18cm of rain causing the river to rise about … Continue reading

Asbestos exclusion upheld in US

By Patrick Bracher (ZA) on May 25, 2017 Posted in Insurance

An exclusion for claims ‘arising out of asbestos’ was upheld by a US appeal court 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

Exclusions for faulty workmanship & recalls rejected (US)

By Patrick Bracher (ZA) on May 22, 2017 Posted in Insurance

A Los Angeles court found the insurer liable for a damaged shipment of corn syrup, rejecting the defences that two exclusions for precautionary recalls and faulty workmanship resulting in goods being restored, repaired or replaced applied because the damaged corn syrup was not recalled. It was just sold for a lower price. The corn syrup … Continue reading

Homeowners’ policy does not cover insured as fitness instructor (US)

By Patrick Bracher (ZA) on May 3, 2017 Posted in Insurance

An Arizona appeals court has ruled that a claim by a woman who had a stroke during a fitness-club workout is not covered by the instructor’s homeowners’ insurance policy because the business exemption applied. When the member of the fitness-club sued her instructor, the instructor made a claim under the homeowners’ policy but the policy … Continue reading

Exclusion for medical services in a medical malpractice claim (US)

By Sandra Sithole (ZA) on April 24, 2017 Posted in Insurance

Over a 150 patients claimed damages against a hospital because of an outbreak of fungal meningitis and related infections which resulted from the patients receiving injections with contaminated substances. The court held that there was no claim under the insurer’s commercial package policy based on personal injury claims because the policies excluded bodily injury ‘due … Continue reading

Interpretation of exclusions

By Patrick Bracher (ZA) on February 22, 2017 Posted in Drafting tips

Traditionally, ambiguous exclusion clauses provide little or no protection because they will be interpreted narrowly and against the person who tried to exclude their liability (in Latin the contra proferentem rule). In the light of modern methods of interpretation it is doubtful that this principle of interpretation can be used in every case for anything … Continue reading

Cover for collapsed crane excluded by a contractor’s equipment exclusion (US)

By Daniel McConnell on February 20, 2017 Posted in Insurance

A New York Court of Appeals rejected a claim for collapse of a tower crane during Hurricane Sandy because the policy had an exclusion for ‘contracted tools, machinery, plant and equipment’. It rejected the insured’s submission that the crane was covered as a ‘temporary structure’. Readers will remember the traumatic images of the boom of … Continue reading

Mudslide is not an explosion (US)

By Patrick Bracher (ZA) on October 24, 2016 Posted in Insurance

An insured unsuccessfully contended that the destruction of a building during a mudslide was an explosion under the policy terms. Torrential rain in Boulder, Colorado in September 2013 triggered a mudslide that cascaded down a hill and destroyed the property, leading to a loss of $1.3 million. The policy excluded losses due to water-based causes, including … Continue reading