Insurance Law Monthly

The ongoing battle between credit hire suppliers and motor liability insurers has taken a significant new turn in W v Veolia Environmental Services (UK) plc [2011] EWHC 2020 (QB). Where the credit hire agreement is rendered unenforceable by reason of some error by the supplier in compliance with the technical requirements for giving notice of cancellation rights to the customer, then the customer cannot seek to recover by way of damages the sums payable to the credit hire company. However, if those sums have actually been paid, the decision of HHJ Mackie QC in the present case shows that subrogation rights are unimpaired.

The equitable principle of contribution, as it applies to insurance, ensures that if there are two insurers both liable for the same claim then payment by one insurer can be recouped from the other so that they bear their loss in respective proportions. Contribution has a number of anomalies, and certain issues remain unresolved, but recent decisions, particularly from the Australian courts, have made it clear that contribution applies as long as both policies are required to respond to the loss even though the policies are different in nature and scope. The decision of the High Court of Australia in HIH Claims Support Ltd v Insurance Australia Ltd [2011] HCA 31 recognises a restriction on contribution, and that is that each party must have a contribution claim against the other: if for whatever reason, one insurer is immune from a contribution claim, then the mutuality requirement is a bar to its own contribution claim.

The EU’s five Motor Insurance Directives, now codified in European Parliament and Council Directive 2009/103/EC, demand that the users of motor vehicles insure against liability for death, personal injury and property damage. The purpose of the Directives is the furtherance of a single market whereby persons can travel freely, so that a victim is to be protected irrespective of the EU member state in which injuries have been inflicted, and to that end a policy must cover civil law liabilities in every EU member state. However, the various countries comprising the EU all have their own tort liability regimes, and the Directives have never sought to harmonise those regimes: they merely say that if there is liability, insurance must cover it. The relationship between tort liability and insurance coverage has nevertheless been examined in two recent cases referred to the European Court of Justice by the Portuguese courts, Santos v Companhia Europeia de Seguros SA Case C-484/09 and Lavrador v Companhia de Seguros Fidelidade-Mundial SA Case C-409/09.

Gard Marine & Energy Ltd v Tunnicliffe and Ors [2011] EWHC 1658 (Comm), a decision of David Steel J, gave rise to a tricky question of the interpretation of a deducible clause in a reinsurance contract. The learned judge resolved the question by reference to expert evidence of market understandings and also to the principle that reinsurance coverage matches the underlying insurance.

The cover provided by a business interruption policy is often provided in a separate section of a wider policy covering, amongst other things, physical damage to the insured subject matter. It is also common for the two sections to be linked, so that there is business interruption cover only where loss of revenue is caused by material damage. In Mainstream Aquaculture Pty Ltd v Calliden Insurance Ltd [2011] VSC 286 the question before the Supreme Court of Victoria was whether there had been any physical damage. This was a preliminary issue, so that other questions were not under consideration at this stage.

The EU’s five Motor Insurance Directives, now codified in European Parliament and Council Directive 2009/103/EC, demand that the users of motor vehicles insure against liability for death, personal injury and property damage. The purpose of the Directives is the furtherance of a single market whereby persons can travel freely, so that a victim is to be protected irrespective of the EU member state in which injuries have been inflicted, and to that end a policy must cover civil law liabilities in every EU member state. However, the various countries comprising the EU all have their own tort liability regimes, and the Directives have never sought to harmonise those regimes: they merely say that if there is liability, insurance must cover it. The relationship between tort liability and insurance coverage has nevertheless been examined in two recent cases referred to the European Court of Justice by the Portuguese courts, Santos v Companhia Europeia de Seguros SA Case C-484/09 and Lavrador v Companhia de Seguros Fidelidade-Mundial SA Case C-409/09.

The equitable principle of contribution, as it applies toinsurance, ensures that if there are two insurers both liable forthe same claim then payment by one insurer can be recouped from theother so that they bear their loss in respective proportions.Contribution has a number of anomalies, and certain issues remainunresolved, but recent decisions, particularly from the Australiancourts, have made it clear that contribution applies as long asboth policies are required to respond to the loss even though thepolicies are different in nature and scope. The decision of theHigh Court of Australia in HIH Claims Support Ltd v InsuranceAustralia Ltd [2011] HCA 31 recognises a restriction oncontribution, and that is that each party must have a contributionclaim against the other: if for whatever reason, one insurer isimmune from a contribution claim, then the mutuality requirement isa bar to its own contribution claim.