High Court Rules on Notifications to Separate Policy Years

In The Cultural Foundation v Beazley Furlonge and Others [2018] EWHC 1083 the Commercial Court considered the division of liability between primary and excess insurers in circumstances where it was unclear to which year the relevant claims had been notified. There were several other preliminary issues in this case, however the decision as to notification is of the greatest significance.

The two claimants had brought two claims against a firm of architects (the insured under the relevant policies of insurance) under a series of contracts. Following arbitration awards being made in favour of the claimants, the architects had become insolvent and the claimants sought an indemnity from the insurers under the Third Parties (Rights Against Insurers) Act 1930. A dispute arose as to whether the claims were notified to the primary insurers during the 2008/2009 Policy Year, or whether some of the claims were, in fact notified during the 2009/2010 Policy Year. The significance of this question arose out of the fact that the individual arbitration awards fell within the primary policy limit (of $10m) but, together, they exceeded it. The primary insurer sought a contribution from the excess insurers, on the basis that the claims were all notified during the 2008/2009 Policy Year.

It was common ground that all of the second claimant’s claims fell within the 2009/2009 Policy Year. However, it was argued that part of the first claimant’s claim fell within the 2008/2009 Policy Year, and part fell within the 2009/2010 Policy Year, as there had been two separate notifications to the insurers of circumstances giving rise to claims.

On the facts of the case, the court held that whilst some elements of the claim arose from the circumstances notified to the 2008/2009 Policy Year, other elements of the claim in fact fell within the 2009/2010 Policy Year, as the original notification of the claims to the earlier year had been too general to notify the insurers of a specific circumstances that may give rise to a claim.

Of more general application, the court held that where a clause in an insurance contract provides that any claim arising from a circumstance will be considered made during the policy period in which the circumstance is notified, the court should require a causal, rather than coincidental, link between the notification and the ultimate claim.

 

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