Products liability

In the October 2008 issue of Insurance Law Monthly there was discussion of the decision of Mr Justice Burton in Reilly v National Insurance & Guarantee Corporation Ltd [2008] EWHC 722 (Comm), a case on preliminary issues on the construction of a product liability policy. The learned judge ruled that an exclusion in the policy relating to failure of machinery precluded any claim. That ruling has been reversed in part by the Court of Appeal, [2008] EWCA Civ 1460. The leading judgment in the Court of Appeal was given by Lord Justice Moore-Bick.

Reilly: the facts

The facts as set out in the trial judge’s judgment were adopted by the Court of Appeal. The claimant was in the business of installing fire detection and protection systems at clients’ premises. He was insured under a liability policy that covered both public liability and product liability. The public liability section had an indemnity limit of £2m in respect of occurrences, defined as accidental damage to property. The product liability section similarly covered the assured against accidental damage to property caused by any products supplied by the claimant, but excluding loss as the result of ‘the failure of any fire or intruder alarm switch gear control panel or machinery to perform its intended function’.