Deepak Fertilisers v ICI Chemicals: CA 1991

P’s methanol plant had been constructed with the use of know-how and services supplied by D. Following completion the plant exploded. The plaintiff sued D for negligence and breach of contract. The plaintiff had undertaken to indemnify D against loss to the plant and to cause D to be named as co-insured in all insurances effected in respect of the plant. D contended that it had a complete defence to the claim because it was entitled to be insured against it. In that context the question arose whether or not, following completion of the plant, D had an insurable interest in the plant itself.
Held: It did not. Whilst D had an insurable interest in the plant under construction, because it might lose the opportunity to work on it and earn remuneration if it were destroyed, after completion its only interest was in damage or destruction to the plant caused by D’s own breach of contract or duty of care and that could be insured only by liability insurance not insurance on the property or structure itself.
References: [1991] 1 Lloyds Rep 387
Judges: Stuart-Smith LJ
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Last Update: 27 November 2020; Ref: scu.184483