Insurance: Waiver Of Breach Of Condition Precedent

A recent decision in the Commercial Court examined whether:

an insured's breach of a condition precedent to promptly notify insurers of an incident giving rise to a liability could automatically discharge insurers from their liability to pay a particular claim under a policy; and

whether the breach could ever in fact be waived by the insurer as a result.

In finding for the insured the judge held that the condition, which related to "non-performance of obligations relating to the procedure for making claims", did not amount to a promissory warranty affecting the cover as a whole. As a result there was no automatic discharge of liability of the Insurer from its entire liability under the policy, with the result that the insurer could, and had through its actions and representations, elect to accept the claim.

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Full Article

A recent decision in the Commercial Court examined whether:

an insured's breach of a condition precedent to promptly notify insurers of an incident giving rise to a liability could automatically discharge insurers from their liability to pay a particular claim under a policy; and

whether the breach could ever in fact be waived by the insurer as a result.

In finding for the insured the judge held that the condition, which related to "non-performance of obligations relating to the procedure for making claims", did not amount to a promissory warranty affecting the cover as a whole. As a result there was no automatic discharge of liability of the Insurer from its entire liability under the policy, with the result that the insurer could, and had through its actions and representations, elect to accept the claim.

Background

In Kosmar Villa Holidays Plc v. Trustees of Syndicate 1243 the insured ("Kosmar"), a specialist tour operator, sought an indemnity under its combined liability policy from the defendant insurer which was the successor to Euclidean Direct Ltd. The indemnity was sought for a claim by a Mr Evans who had dived into a swimming pool in Corfu tragically fracturing his spine which resulted in incomplete tetraplegia.

The case centred on a claims cooperation clause the first limb of which provided that it was a condition precedent to liability that Kosmar "shall immediately after the occurrence of any injury or Damage give notice in writing with full particulars to Insurers". The second limb of the clause provided that "Upon receipt by or on behalf of the Insured of...