Insurance Law Monthly

Professional indemnity policies written for firms of professionals are typically written on a composite basis, so that each individual member of the firm is protected in respect of his or her own acts as long as they are not fraudulent, and the fraud of other members of the firm leaves claims unaffected. In Goldsmith Williams v Travelers Insurance Co Ltd [2010] EWHC 26 (QB) the court was required to construe a policy issued to a firm of solicitors, which removed cover if all of the directors of the firm were guilty of or had condoned fraud. The most important issue before Wyn Williams J was whether a general condonation of fraud was sufficient, or whether knowledge had to relate to the specific fraud which had occurred. The learned judge preferred the former, wider, construction of the fraud exclusion.

It is settled law that the duties of a broker do not come to an end when the risk is placed, and that a broker remains under an obligation to represent the assured’s interests during the currency of the policy. If, therefore, the assured requests the broker to pass on information to the assured which may affect cover under the policy, the broker must do so. That principle was not disputed in Yechiel v Kerry London Ltd [2010] EWHC 215 (Comm). The issue was whether the information had been communicated to the broker in the first place. Jonathan Hirst QC, sitting as a Deputy High Court Judge, found that it had not.

Widefree Ltd v Brit Insurance Ltd [2009] EWHC 3671 (QB), 22 December 2009, a decision of Peter Leaver QC, sitting as a Deputy Judge of the High Court, turns on its facts and indeed no authority is cited in the lengthy judgment. However, there is an interesting analysis of ‘unexpected loss’ clauses, which feature quite regularly in property covers but which have never before been judicially construed. There are also interesting comments on the scope of claims cooperation provisions.

In Thwaites v Aviva Assurances, a decision of the Mayors and City of London Court in February 2010, the issue was whether a direct action could be brought in England against the liability insurers of a French organisation which had allegedly committed a tort against the claimant in France. English law did not permit such an action, but the court’s ruling was that the law applicable to determining the existence or otherwise of a direct action was the law applicable to the policy, which in the present case was French law: because French law permitted such an action, it could go ahead in England.

In Crowson v HSBC Insurance Brokers, 26 January 2010 (Ch D) the question for Chancery Master Bragge was whether there was an arguable case that insurance brokers owed a duty of care to a third party who was to be either a co-assured under, or at least a beneficiary of, an insurance policy which the brokers had been instructed to procure by the primary assured. The court thought that the claim should not be struck out.

Business interruption cover is triggered where the assured has suffered material damage to the insured property during the currency of the policy. In Loyaltrend Ltd v Creechurch Dedicated Ltd [2010] EWHC 425 (Comm) the assured was required to give immediate notification of material damage, and the court had to consider when such damage had occurred and whether immediate notice of it had been given.