Property insurance

Policies taken out by bailees

English law has long accepted that a person in possession of goods belonging to a third party may insure those goods for their full value, although he will be required to account to their owners for the insurance proceeds in the event of any loss. The question in any one case is whether the policy, on its proper construction, covers goods, or whether it covers the assured’s liability to the owners of the goods. A further possibility is that the possibility covers the goods, but only insofar as the assured has any liability to the owner in respect of them. The decision of Andrew Smith J in Ramco (UK) Ltd and others v International Insurance Co of Hannover Ltd and another [2003] EWHC 2360 (Comm) illustrates the construction issues which may arise where a policy is taken out by a warehouseman, carrier or other bailee.