Claims obligations

In Aspen Insurance UK Ltd v Pectel Ltd [2008] EWHC 2804 (Comm) Mr Justice Teare was asked to construe the claims provisions of a liability policy in order to determine whether a notification provision had been converted into a condition precedent by a general clause deeming all terms and conditions to be of that nature.

Aspen Insurance: the facts

The assured was a specialised construction contractor with expertise in the removal of asbestos from large sites and in particular from major underground facilities worldwide. For the period August 2003 to August 2004 the assured was insured under a Combined Liability policy written by CIC. However, CIC had to be replaced for regulatory reasons, and on 11 February 2004, the assured’s brokers obtained replacement cover subscribed to by the claimant underwriters. The policy stated that the insurers ‘will not indemnify the Assured in respect of any Claim arising from activities commenced by or on behalf of the Assured prior to the Retroactive Date specified in the Schedule’, that date being 11 February 2004. The policy contained 13 conditions. Condition 4 set out the claims procedure, and condition 4(a) required the assured to give immediate written notice to brokers of: ‘(i) any occurrence which may give rise to indemnity under this insurance.’ Condition 13, entitled ‘Observance’, went on to state that: ‘The liability of Underwriters shall be conditional on … The Assured paying in full the premium demanded and observing the terms and conditions of this insurance.’