Insurance Law

Citation(2007) 8 SAL Ann Rev 290
Published date01 December 2007
Date01 December 2007

16.1 There were two main cases of note in 2007. Both involved issues of construction of the operative clauses of the insurance policy. In both cases, the court relied a fair bit on commercial considerations to come to the conclusion that it did in construing the operative clauses.

‘All risks’

16.2 One of the most common policies in use, when money is no object, is an ‘all risks’ policy. Simply put, such a policy covers all risks which are fortuitous. However, it does mean that all risks are thereby covered under the policy. As anyone who has to deal with any commercial contract, the term ‘all risks’ does not quite mean all and any form of loss. Firstly, the loss has to be caused by a fortuitous event. Secondly, whether the loss is covered by the policy will still depend on the ambit of the bargain, which begs the question of whether there are risks or events which are excluded by the insurer.

B-Gold Interior Design & Construction Pte Ltd v Zurich Insurance (Singapore) Pte Ltd [2007] 4 SLR 82

16.3 The appellant had been engaged by an employer to undertake repairs and renovation to its premises. One of the terms of the contract for works required the appellant to obtain insurance cover for the benefit of the employer, the appellant and subcontractors against liability or loss arising from damage to any property in the course of or by reason of the works, where the same was due to any negligence, omission or default of the appellant or subcontractor. A contractor”s all-risk policy of insurance was taken out with the respondent insurer (‘the policy’). It transpired that a copy of the contract for works was furnished to the insurer prior to the parties entering into an insurance contract.

16.4 A fire broke out during the course of the works. As a result, damage was caused to the employer”s property (‘the damage’). It was found by the District Court that the appellant had breached its duty of care in respect of the employer”s property.

16.5 A third party action was taken out by the appellant against the insurer. The main question was whether the policy covered the damage.

The Policy

16.6 The relevant portions of the policy were as follows:

Section I — material damage:

The Company hereby agree with the Insured that if at any time during the period of cover the items or any part thereof entered in the Schedule shall suffer any unforeseen and sudden physical loss or damage from any cause, other than those specifically excluded, in a manner necessitating repair or replacement, the Company will indemnify the Insured in respect of such loss or damage as hereinafter provided by payment in cash, replacement or repair (at their own option) up to an amount not exceeding in respect of each of the items specified in the Schedule the sum set opposite thereto and not exceeding in ant [sic] one event the limit of indemnity where applicable and not exceeding in all the total sum expressed in the Schedule as insured hereby.

Section II — third-party liability:

The Company will indemnify the Insured up to but not exceeding the amounts specified in the Schedule against such sums which the Insured shall become legally liable to pay as damages consequent upon

  1. (a) accidental bodily injury or illness of third parties (whether fatal or not),

  2. (b) accidental loss of or damage to property belonging to third parties

occurring in direct connection with the construction or erection of the items insured under Section I and happening on or in the immediate vicinity of the site during the Period of Cover.

In respect of a claim for compensation to which the indemnity provided herein applies, the Company will in addition indemnify the Insured against

  1. (a) all costs and expenses of litigation recovered by any claimant from the Insured, and

  2. (b)all costs and expenses incurred with the written consent of the Company,

provided always that the liability of the Company under this section shall not exceed the limits of indemnity stated in the Schedule.

  1. (i) Special exclusions to Section II (‘Special Exclusions’):

The Company will not indemnify the Insured in respect of

  1. 1. the deductible stated in the Schedule to be borne by the Insured in any one occurrence;

  2. 2. the expenditure incurred in doing or redoing or making good or repairing or replacing anything covered or coverable under Section I of this Policy;

  3. 3. …

  4. 4. liability consequent upon

    1. a) …

    2. b) loss of or damage to property belonging to or held in...

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