Insurance Law Monthly

The UK and EU authorities on the scope of compulsory motor insurance have taken a divergent approach. The UK legislation demands a causation approach based on liability caused by or arising out of the use of a vehicle on a road or in a public place. The EU approach is to ask whether the liability arose from the use of its vehicle for its normal function. The outcome differs most significantly where the vehicle is on private land when the accident occurs, but otherwise there is general consistency.

It has long been settled that the overriding duty of an insurance broker is to protect the assured against litigation risks. In Dalamd Ltd v Butterworth Spengler Commercial Ltd [2018] EWHC 2558 (Comm) the insurers denied liability for loss caused by a fire by reason of non-disclosure and breach of policy terms. The assured alleged that these breaches were by reason of the failure of the broker to give proper advice on what had to be disclosed and on the existence and meaning of the conditions of the policy.

Mamancochet Mining Ltd v Aegis Managing Agency Ltd and Others [2018] EWHC 2643 (Comm) was a consequence of the political fall-out between the US and the EU on the need for the imposition of sanctions against Iran. Until May 2018 sanctions imposed by both the US and EU in 2012 had been suspended in January 2016. However, on 8 May 2018 the US unilaterally re-imposed the sanctions.

Defence costs clauses in liability policies are many and varied. The clause in Australasian Correctional Services Pty Ltd v AIG Australia Ltd [2018] FCA 2043 imposed an obligation on the insurers to pay defence costs. The insurers raised two defences: part of the claim against the assured was not covered by the policy, so that the costs should be apportioned; and the costs included both costs payable to the third party and costs incurred by the insurers for the purposes of a policy deductible.