Policy Coverage Weathering The Storm Revisited

In the September 2006 issue of Insurance Focus we commented that the decision of Robert Lewis Caine v Lumley General Insurance Limited [2006] NSWSC 337 indicated that insurers had weathered the trend to expansive interpretation of policy coverage. The NSW Court of Appeal recently reviewed this decision with the result that while the insurer did suffer a little more ?weathering', the outcome was one that generally favoured insurers.

Overview

Caine operated a caravan park. On 16 January 2002, the park was struck by a severe storm, including hail and torrential rain. Damage was sustained, including damage to caravans, annexes and tropical roofs over the caravans. The caravans were permanently located at the park. The ?tropical roofs' above them relied on the caravans for structural support.

In relation to the caravans, Caine sought recovery of the following:

$95,700.00 for caravans.

$85,031.25 for tropical roofs.

$477,903.17 for annexes.

$53,760.00 for extra costs of raising the annexe floors.

Caine also claimed an additional amount of $72,880 for the extra costs of reinstating the annexes and tropical roofs so as to comply with Council requirements.

Prior to the proceedings, the insurer, Lumley, had paid out $100,000 under the relevant policy for hail damage to the caravans. This was the limit arising under Exclusion 15 for damage caused by hail. Lumley argued that the annexes and tropical roofs formed part of the caravans. Caine argued that the annexes and tropical roofs did not form part of the caravans and therefore...