The New Zealand Supreme Court has granted leave to Tower Insurance to appeal the Court of Appeal’s adverse judgment against it: Tower Insurance Ltd v Skyward Aviation 2008 Ltd  NZSC 93.
We provided commentary on the Court of Appeal’s judgment in an earlier edition of nzinsurance law: read it here. Or alternatively listen to it on your smartphone while driving by following this link. We have received constructive feedback on this podcast; your correspondent’s vocal manner being described as either robotic or monotonous. Your correspondent is investigating the cost and utility of vocal coaching.
On a more serious note, we earlier noted that, in its reasoning, the Court of Appeal referred to the policyholder’s ownership interest, which included a “legitimate interest” in retaining a neighbourhood link to the existing location of the property, in contrast to the insurer’s “strictly economic” interest. The suggestion that, in an insurance policy, language must be unequivocal in order to leave unaddressed a policyholder’s legitimate interest in the property was a very interesting one and will most likely be the focus of some attention in the Supreme Court hearing.
23 July 2014
The British government has introduced a business insurance law reform bill, following an almost decade long period of consultation.
The prosaically named “Insurance Bill” is beginning its journey through the Westminster parliamentary systems which on 17 July started with its first reading in the House of Lords.
Among other topics, the bill deals with warranties, and the consequences of a business policyholder breaching one. The historical position in England has been that a breach of warranty may deprive a policyholder of cover even where the breach has not caused or contributed to the loss in question. This is sometimes given the short-hand of a “non-causative breach”.
The preponderant view is that the deprivation of cover following a non-causative breach is unfair, and it does not make good sense as a matter of economics. In New Zealand, this topic is dealt with by s. 11 of the Insurance Law Reform Act 1977, the effect of which is to disentitle the insurer from relying on the relevant provision if the policyholder shows on the balance of probabilities that the loss in respect of which the policyholder seeks to be indemnified was not caused or contributed to by the happening of the event or circumstances in question. The Insurance Bill provides that the insurer’s liability should be suspended, rather than discharged, in the event of a breach of warranty. Cover is restored after the policyholder has remedied the breach.
The Insurance Bill needs to be read alongside the UK Consumer Insurance (Disclosure and Representations) Act 2012, which took effect in April 2013 and which, as the name suggests, applies only to consumer insurance. The Insurance Bill applies to business, non-consumer insurance. The NZ Insurance Law Reform Act 1977 does not make any distinction.