The court was asked whether the costs of flood alleviation works were recoverable under public liability insurance policies.
Held: A claim for the costs of remedial action taken to mitigate future losses were not covered by the terms of the insurance policy. The court considered the relevance of American cases.
Stuart-Smith LJ said: ‘the American Courts adopt a much more benign attitude towards the insured; this seems to be based variously on the ‘folly’ argument in Leebov or ‘general principles of law and equity’ or that insurance contracts are: ‘contracts of adhesion between parties who are not equally situated’ giving rise to the principle: . . that doubts as to the existence or extent of coverage must generally be resolved in favour of insured . . or because the Courts have . . adopted the principle of giving effect to the objectively reasonable expectations of the insured for the purpose of rendering a ‘fair interpretation’ of the boundaries of insurance cover.’ As to the construction of contracts of insurance: ‘1. The words of the policy must be given their ordinary meaning and reflect the intention of the parties and the commercial sense of the agreement. Thus they must be construed in their context . . 2. A literal construction that leads to an absurd result or one otherwise manifestly contrary to the real intention of the parties should be rejected, if an alternative more reasonable construction can be adopted without doing violence to the language used. 3. In the case of ambiguity the construction which is more favourable to the insured should be adopted; this is the contra proferentem rule.’
Stuart-Smith LJ
Gazette 18-Sep-1996, Times 20-Aug-1996, [1997] 2 Lloyds Rep 21
England and Wales
Citing:
Cited – Charter Reinsurance Co Ltd v Fagan and Others HL 24-May-1996
The re-insurers appealed against a finding that they were liable to make payment under a contract which required them to pay ‘sums actually paid.’ They said that the company having become insolvent, no payment would in fact be made.
Held: The . .
Cited – Hall Brothers Steamship Company Limited v Young CA 1939
The shipowners appealed a decision that the underwriters were not liable under collision liability clause. Their ship had collided with another at Dunkirk when the steering gear failed. Under french law the pilot was not liable since he had not been . .
Cited by:
Cited – Pilkington United Kingdom Limited v CGU Insurance Plc QBD 28-Jan-2004
The claimants had installed glass tiles in a roof. They fractured, and facing a claim for damages, they sought payment from their insurers. The claimants argued that the risk of fracture meant that the damage occurred upon installation, the insurers . .
Cited – Blackburn Rovers Football and Athletic Club Plc v Avon Insurance Plc, Eagle Star Insurance Company Ltd, AGF Insurance Ltd IC Insurance Ltd ComC 15-Nov-2004
The claimant football club insured its players through the defendants. A footballer injured himself in training and his career was finished. The insurers rejected the claim, and relied upon exception clauses, saying that the true cause was a . .
Cited – Bedfordshire Police Authority v Constable and others ComC 20-Jun-2008
The authority insured its primary liability for compensation under the 1886 Act through the claimants and the excess of liability through re-insurers. The parties sought clarification from the court of the respective liabilities of the insurance . .
Cited – Bedfordshire Police Authority v Constable CA 12-Feb-2009
The police had responded to a riot at Yarlswood detention centre. They had insurance to cover their liability under the 1886 Act, but the re-insurers said that the insurance did not cover the event, saying that the liability was for statutory . .
Lists of cited by and citing cases may be incomplete.
Insurance
Updated: 23 November 2021; Ref: scu.90673