Life insurance: can a death benefit cover terminal illness if medical treatment provides a cure?

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Life insurance: can a death benefit cover terminal illness if medical treatment provides a cure?

Catherwood v Asteron Life Ltd [2022] NZHC 3296

The High Court has recently denied Mr Catherwood’s claim for breach of a life insurance policy for terminal illness.  The Court addressed the issue of whether the definition of “terminal illness” and “terminally ill” in the policy intended to take into account the effect of available medical treatment on a person’s life expectancy.  The Court held that Asteron Life Limited (Asteron) had not breached the terms of the contract of insurance by denying the terminal illness extension of the life policy, when Mr Catherwood had treatment available to him that meant he was not going to die.

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Indemnity focus: meaning of corrosion and resultant physical damage

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Indemnity focus: meaning of corrosion and resultant physical damage

MDS Inc v Factory Mutual Insurance Co [2021] ONCA 594

A corrosion exclusion is a common feature of many policies. In this article, we look at a Canadian decision which held that a corrosion exclusion applied to “unanticipated” corrosion at a nuclear facility, leading to a leak, which in turn led to a shutdown. But the shutdown was not resultant physical damage, so that there was no cover for the losses which resulted.

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A return to ‘normal’ - Napier City Council v Local Government Mutual Funds overturned on appeal

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A return to ‘normal’ - Napier City Council v Local Government Mutual Funds overturned on appeal

In August last year we reported on the High Court decision of Grice J in Napier City Council v Local Government Mutual Funds Trustee Limited (Riskpool). In that decision, Her Honour held that the Council was not indemnified under its professional indemnity insurance policy with Riskpool as the claim against it was in respect of both weathertightness and non-weathertightness defects. Consequently, the policy’s weathertightness exclusion clause applied to the entire claim. At the time, we commented that the decision may have come as a surprise to many in the insurance industry as it went against the approach taken by many insurers, which was to differentiate between weathertightness and non-weathertightness defects when considering indemnity. It was only when there was a defect which was caused or contributed to by an excluded peril that was excluded from cover.

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Tenant’s exoneration provisions of the Property Law Act 2007 extend beyond the leased premises

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Tenant’s exoneration provisions of the Property Law Act 2007 extend beyond the leased premises

Inlet Storage Limited v United Movers Limited [2021] NZDC 23513[1]

Sections 268 and 269 of the Property Law Act 2007 exonerate tenants of property from liability for damage caused by a range of perils, including fire and flood, where the landlord has an insurance policy that covers the causative peril. Where that is the case, the tenant cannot be required to meet the costs of making good the destruction or damage, or to pay damages “in respect of” the same. The District Court recently considered the application of these sections beyond the leased premises to neighbouring properties.

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Ch-ch-changes! Reforming insurance law – draft Insurance Contracts Bill released for consultation

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Ch-ch-changes! Reforming insurance law – draft Insurance Contracts Bill released for consultation

Significant changes to New Zealand’s insurance laws are in the pipeline. Following public consultation on proposed changes in 2018 and 2019, Cabinet has made policy decisions on the key changes which are to occur to insurance law. Last month, MBIE released an exposure draft of the new Insurance Contracts Bill which aims to brings New Zealand closer into line with the policyholder-friendly changes which have already occurred in Australia and the United Kingdom. While further public consultation is invited, it appears much of the change has been already been decided.

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Russian cyber attack not “warlike” – clarifying the scope of the war exclusion

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Russian cyber attack not “warlike” – clarifying the scope of the war exclusion

Merck & Co v Ace American Insurance Co No: UNN-L-2682-18

It is not often that courts have occasion to look at the construction of the ‘war risks’ exclusion. In a novel argument, the insurer relied on the war risks exclusion to deny cover to an insured for losses arising from a cyber attack. The Superior Court of New Jersey held that it did not apply. In doing so, it provided useful clarification of the meaning of the exclusion.

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Indemnity focus:  the meaning of ‘control’

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Indemnity focus:  the meaning of ‘control’

Penfold v The Hollard Insurance Co Pty Ltd [2021] NSWSC 1322

Insurers and brokers are often presented with a difficult fact-specific question to resolve – is property within the physical and legal control of an insured? An insured’s legal responsibility will often turn on this, and so too may its coverage position. In this article we look at a recent Australian decision which held that property owners may have “control” of goods on their property even if they have not charged for storage and have not exercised any power over the goods.

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Focus on indemnity: Insurance Claim Time Barred – Clock Started Ticking Immediately

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Focus on indemnity: Insurance Claim Time Barred – Clock Started Ticking Immediately

Bann Carraig Ltd v Great Lakes Reinsurance (UK) Plc [2021] NIQB 63

This decision from the High Court of Northern Ireland is a cautionary tale for insureds not to delay too long after an insured peril before filing proceedings, and a reminder for insurers to consider potential limitation defences when faced with old claims.

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‘Swings and roundabouts’:  clarifying the ability to aggregate claims

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‘Swings and roundabouts’:  clarifying the ability to aggregate claims

The Right Reverend Nicholas Baines, Lord Bishop of Leeds v Dixon Coles & Gill [2021] EWCA Civ 1211

The English Court of Appeal recently considered whether claims brought against a law firm for the systematic fraud of one of its partners should be aggregated for the purposes of the limit of indemnity in the firm’s insurance policy. The English High Court’s judgment, upheld on appeal, was that the claims should not be aggregated and that each attracted a separate limit of indemnity.

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Who gets what?  Dividing recovery proceeds between insured and insurer

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Who gets what?  Dividing recovery proceeds between insured and insurer

Technology Swiss Pty Ltd v AAI Limited t/a Vero Insurance [2021] FCA 95

The Federal Court of Australia recently considered how to allocate between insurer and insured the proceeds of a recovery action against a third party. The case emphasises that an insurer has a right to share in the proceeds of a recovery action only to the extent that the insurer provides indemnity under the policy. Where the insurer pays a settlement to the insured for costs incurred by the insured which are not part of the indemnity provided by the policy then, absent a contractual right, the insurer has no right to share in the fruits of a recovery action. If the insurer wants to procure this right, it needs to ensure that the settlement agreement with the insured makes this clear.

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Second Covid test case in Australia favours insurers

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Second Covid test case in Australia favours insurers

Swiss Re International SE v LCA Marrickville Pty Limited [2021] FCA 1206

On 8 October 2021, the Federal Court of Australia handed down its decision on the second test case in Australia on business interruption response to COVID-19-related claims. Unlike the first test case,[1] the decision largely went the insurers’ way. Crucially, it also reached a very different conclusion from that reached by the United Kingdom Supreme Court in FCA v Arch UKSC Arch[2] in that country’s test case.

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Court dismisses claim by “consumer” for damage caused by fire to yacht

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Court dismisses claim by “consumer” for damage caused by fire to yacht

Tregidga v Pasma Holdings Pty Limited [2021] FCA 721

The Federal Court of Australia has recently considered and dismissed a claim against contractors carrying out electrical repairs on a yacht for fire damage. The legal basis for the decision and the reasoning employed by the court is of relevance to both material damage and liability insurers alike.

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A major victory for James Hardie:  No liability for Harditex cladding

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A major victory for James Hardie:  No liability for Harditex cladding

A major victory for James Hardie: No liability for Harditex cladding

Cridge and Unwin v Studorp Limited; Fowler and Woodhead v Studorp Limited and James Hardie New Zealand Limited [2021] NZHC 2077

The High Court has recently ruled against 144 Harditex-clad homeowners in their claim against James Hardie. The homeowners claimed, but did not establish, that the Harditex cladding was a cause of the weathertightness issues in their homes and that James Hardie breached its duty of care to them. The homeowners also failed to prove that James Hardie had engaged in misleading or deceptive conduct under the Fair Trading Act.

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Focus on indemnity: insuring the careless, reckless or wilful insured

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Focus on indemnity: insuring the careless, reckless or wilful insured

It is commonplace for insurance policies to include an exclusion for deliberate or wilful acts, or a condition precedent that an insured must exercise ‘all reasonable care’. Such clauses intend to incorporate into the policy a requirement for a certain standard of behaviour by the insured: failure to meet that standard renders the insured uninsured.

Two recent Supreme Court decisions from Victoria, Australia, and the United Kingdom have highlighted that the clauses will be construed in light of the commercial purpose of a policy, which presumes that foolish behaviour is intended to be insured. The facts of these cases are useful illustrations of this principle.

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Special Report: A watertight weathertightness exclusion?

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Special Report: A watertight weathertightness exclusion?

Napier City Council v Local Government Mutual Funds Trustee [2021] NZHC 1477

In November 2018, we reported on the High Court decision of Hinton J in respect of an application by Local Government Mutual Funds Trustee (Riskpool) that a claim by Napier City Council be struck out. Riskpool had sought to strike out the Council’s claim on the basis that it had no tenable claim for indemnity as the plain meaning of the policy’s weathertightness exclusion clause (Exclusion) was that a “Claim” was excluded in its entirety if it was tainted by a weathertight defect.

Neither the High Court nor the Court of Appeal were prepared to strike out the Council’s application at an interlocutory stage. As a result, the proceeding returned to the High Court for a full hearing before Grice J in July and August 2020. In a lengthy decision handed down at the end of June 2021, Grice J found in favour of Riskpool and held that both weathertightness and non-weathertightness defects were caught by the Exclusion.

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Location of insurer imperative to s 9 LRA claim

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Location of insurer imperative to s 9 LRA claim

Livingstone v CBL Corporation Ltd (in liq) [2021] NZHC 755

The High Court has recently issued a decision in the CBL litigation which concerned the territorial ‘location’ of a charge under s 9 of the Law Reform Act 1936 (the LRA). In so doing, the Court reinforced the necessity of using the correct procedure for any jurisdictional challenge.

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Terms of contracts prevail over rights of subrogation

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Terms of contracts prevail over rights of subrogation

The law has long recognised that where an insurer has indemnified an insured for loss caused by a third party, the insurer can sue the third party in the insured’s name to recover the amount paid. However, two recent UK decisions have discussed the question of when the terms of a contract entered into by the insured might impact on rights of recovery.

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No coverage under all risks marine policy for losses resulting from fraudulent shipment

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No coverage under all risks marine policy for losses resulting from fraudulent shipment

Englehart CTP (US) LLC v Lloyd's Syndicate 1221 & Ors [2018] EWHC 900 (Comm)

Englehart, the insured in this UK case, claimed under an “All Risks” cargo insurance policy for loss it sustained in accepting fraudulent bills of lading for a cargo of copper ingots, where that cargo was never in fact shipped.

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