In the policy in question in Ridgecrest v IAG, there was a per “happening” (ie event) limit of liability. The Supreme Court held that the policyholder holder could claim up to this full limit for each event, subject to the proviso that it could not claim in respect of the same damage twice by dint of the indemnity principle.
In contrast to the IAG/ Ridgecrest provision, many relevant material damage policies instead have an aggregate limit for all damage caused by all events during the policy period. On the face of it, this may suggest the Ridgecrest reasoning can be confined. However, these latter policies also tend to contain a provision reinstating the limit after each loss. The authors note that various High Court cases, the subject of a recent conjoined appeal to the Court of Appeal (Wild South Holdings Ltd v QBE Ltd, Maxims Fashions Ltd v QBE Ltd, Marriott v Vero Insurance Ltd and Crystal Imports Ltd v Certain Underwriters at Lloyd’s of London & Anor, 5 August 2014, in respect of which it is understood a decision is still awaited) have held that these reinstatement provisions mean that a policyholder is able to claim a sum in excess of the stipulated aggregate limit if there are multiple losses during the policy period.
The authors state:
It remains to be seen whether the courts will apply the Supreme Court’s analysis of the Ridgecrest policy to material damage policies with aggregate limits and automatic reinstatement clauses. If so, the Ridgecrest decision will be of much broader significance in interpreting and applying material damage policies.
This is an interesting question, and it is suggested the initial answer will lie in the Court of Appeal’s anticipated decision mentioned above. Presumably the learned judges will take into account the Supreme Court’s decision in Ridgecrest while preparing their judgment. Watch this space.
8 September 2014