Read the Insurance Policy - or Else

Yet another case shows the importance of reading and complying with the terms of your insurance policies.

It involved the owner of a trawler valued at over £120,000 who claimed on his insurance policy when the vessel was destroyed by fire whilst tied up in port.

The policy contained a provision that there should be a ‘Warranted Owner and/or Owner’s experienced Skipper on board and in charge at all times and one experienced crew member’. As there were no crew members present at the time of the fire, the insurer refused to pay. The claimant argued that the clause only applied when the vessel was at sea and, if applied literally, would lead to absurd results, especially given the cramped nature of the accommodation on board.

The court supported the insurer, agreeing that the clause had to be interpreted literally. The fact that the clause was practically very difficult indeed for the insured to comply with did not relieve him from his legal obligation.

For the court to make a ruling that insurance cover should be based on what seems to be common sense, rather than what the policy actually says, would be a very risky approach and challenges could proliferate. The courts are not inclined to interpret policies in ways that differ from their strict meanings.