28-1 ACTUAL LOSS

In the case of non-indemnity insurance, the claimants recover the amount stated in the policy.1 In this respect insurance contract law is in line with general contract law which pays careful attention to clear contract clauses on the matter.2 In the case of indemnity insurance, the claimants recover the amount of their actual loss3 and this chapter is concerned with the assessment of actual loss. The indemnity principle means that it will first be necessary to measure the insured’s loss. This may mean that the court will need to consider the financial results of any competing policy wording interpretations; if one would result in the insured gaining more than an indemnity that meaning is less likely to be accepted as having been the parties’ intention. This approach necessarily gives way to clearly expressed intentions. This was the central issue arising in Gatwick Investment Ltd and Others v Liberty Mutual Insurance Europe SE; Bath Racecourse Company Ltd and Others v Liberty Mutual Insurance Europe SE and Others.4 Payments had been made by the government to employer insureds under the Coronavirus Job Retention Scheme (2020-2021) as a result of an insured peril (denial of access). The Supreme Court concluded that these payments had not been made with the intention to gratuitously benefit employers to the exclusion of any insurer. The payments received therefore were deductions from the amount of loss to which the policies responded. In so concluding the Supreme Court also endorsed the summary of law as to treatment of third party payments as had been made by Butcher J in Stonegate Pub Co Ltd v MS Amlin Corporate Member Ltd.5 In short, any payment made by the third party to the insured in respect of the subject matter of insured loss will diminish the loss to benefit the insurer except where the express or inferred intention of the third party is to exclude the insurer from that benefit.6 Insureds may not recover more than their actual loss,7 even if the sum insured is greater (below, 28 - 1A). Moreover, it also follows that the amount recoverable from the insurer is reduced by any indemnity for the same loss already obtained from a third party.8