INSURANCE

Nature and Definition

Insurance is a commercial arrangement/contract that is designed to protect against risks.
Insurance arrangements are contracts so the common law rules of contract will apply to some
extent. In Zambia, insurance law is also regulated by statute. In essence, insurance contracts are
agreements between the person who potentially bears a risk and the person who is willing to
cover that risk, okay; one person pays someone else to bear the risk on their behalf.
Terminology
Insured: the person paying someone else to bear the risk on their behalf.
Insurer: the party that is being paid to bear the risk for the insured.
Premium: the money the insured pays the insurer to bear the risk on their behalf that payment is
called a premium. This serves as the consideration for the policy.
Policy: the insurance contract itself.
The event (fire or road accident) that you are insuring against must be specified in the policy.
However, you may also decide to take up a comprehensive insurance policy that covers all the
losses that may occur from whatever event. This is known as a comprehensive insurance policy.
The Regulation of Insurance Business in Zambia
It's a hybrid form of regulation: regulated by both statute and the common law. The Insurance
Act number 11 of 1997 is the relevant statute that regulates insurance business in Zambia
Formation and Formalities of Insurance Contract.
Because these are contracts, there has to be offer and acceptance for the policy to come into
effect. Everything about normal contracts and how they come into being also apply to insurance
contracts. In insurance contracts, it's the insured that makes the offer to the insurer (I'm offering
you business to ensure my house against fire, and this offer is typically made on what is known
as a proposal form okay. A proposal form simply asks the purported or potential insured certain
questions; a way in which the insured can provide information to the insurer so that the insurer
can make a decision about whether to insure them or not. In short, the proposal form is the offer.
So once you fill out that proposal form, then you send it to the insurance company, which may
reject or accept that offer. If the insurance company accepts the offer it issues, what is known as
a cover note. It is basically an indication that you have been covered. Acceptance may take many
forms; verbal or written. But typically the issuance of the cover note is communication of
acceptance. The parties should have agreed on every material term of the insurance contract:
1. the risk to be covered should be described and identified with adequate specificity;
2. the duration of the insurance cover;
 3. the amount of the premium (will the net premium increase or decrease as time goes on);
4. The mode of payment; and
5. what you will be paid to you in the event of loss (is it hard cash or the insurer will just
replace the damaged good).
Without these formalities, there would be no valid insurance contract.
Formalities
Insurance contracts are typically written but does the law require them to be written? The law is
not really clear on this matter as Section 75 (policies to be printed in clearly legible form) says
that, ‘no person shall issue a policy containing printed provisions which are not in clear type face
with letters of a size not less than eight point.’ This section does not say that all policies should
be written but it envisages a scenario where all policies are written. Just to be on the safe side, all
policies should be written.
Section 80 states that, ‘a policy issued to any person before or after the commencement of this
Act shall not be invalid, nor shall it be unenforceable by that person, by reason only of the fact
that the person contravened or failed to comply with the provisions of any enactment in force
applying to that policy.’ What this section is saying is that when an insurance policy has been
issued, it's not necessarily unenforceable just because there is a provision or a law that has not
been complied with, meaning that non-compliance with the provision of the Act does not often
by itself invalidate the offensive policy. So, basically what this is saying is that even if Section
75 is offended, the offensive policy is still valid
Agency vis-à-vis Insurance Business
The relationship between agents and their principal and insurance is governed by the ordinary
laws of agency. Someone may be called an agent but may not actually be an agent in terms of the
law. Agents in insurance law also have extra duties that are prescribed by statute. So there are
two types of agents in insurance business: brokers and insurance agents. Okay, so brokers and
insurance agents. Brokers act on behalf of the insured or the person seeking insurance, and
insurance agents act on behalf of the insurer.
Brokers: typically, people who are looking for insurance in any industry may approach brokers.
The insured rarely do it directly as they work through brokers, because brokers are trained
professionals who try to get the best possible deal of insurance and navigate the complexities of
insurance. The Insurance Act defines a broker in Section 2 as ‘a person who, on behalf of an
insured person or a person who intends to take up an insurance policy arranges insurance
policies.’ Brokers are specifically regulated by statute. Under the common law of agency,
anybody can be an agent, as long as they have contractual capacity, but the same is not true of
brokers. Their capacity or their ability to act as brokers is strictly regulated by statute. Section
5(1) (insurance brokerage) states that, ‘on and from a date prescribed by the Minister by
statutory instrument, a person shall not engage in insurance brokerage unless the person is a
company or partnership licensed under this Act as a broker.’ So an individual cannot be a broker
unless he or she forms a limited company. Again, Section 13 (1) (broker’s license) states that, ‘a
person shall not carry on insurance brokerage in Zambia unless that person is registered as such
under this Act.’ A company is a person at law (a juristic person). So, not only must you be a
company, you must also be registered under the Act and you must have received a broker's
license from the registrar of insurance and one of the requirements for receiving a broker's
license is that the company must have a minimum of 10 years experience in insurance brokerage
or other comparable work. Section 9(1) provides that ‘a person shall not carry on an insurance
agency business unless the person is licensed under this Act as an insurance agent.’ Section 20
(restrictions on business of broker) provides that, ‘a broker shall not carry on any business other
than insurance brokerage; unless - (a) the Registrar has, in writing, approved the business as
reasonably ancillary to insurance brokerage carried on by the broker; and (b) the proportion of
turnover of the broker attributable to the non-insurance business in any financial year does not
exceed such proportion as the Minister may, by statutory instrument, prescribe.’
Duties of Brokers
Advise would-be insured on their insurance requirements by prescribing what the best
policies would be for them: this basically means that the broker sits down with you, asses the
probability of the loss and then advises on what insurance policy would best. The assessment
result also serves to help him or her in negotiating the possible lowest premium and most
favorable terms with the insurer. Brokers also help you in filling the proposal form. Because
policies are contracts of outmost good faith, if you fill in the proposal form wrong or false,
whether deliberate or a genuine mistake, the insurer has the right to completely repudiate the
contract. So it is very important that you fill out the proposal form as fully and as accurately as
possible. Any non-disclosure of a material fact or any concealment makes the contract voidable
by the agreed aggrieved party, so the brokers plays an important role in alerting you to this.
Cover notes: brokers, even though agents of the insured, in some circumstances have the
authority to issue cover notes. The insurance company may give their cover notes to the broker
and the broker actually has authority to issue those cover notes to its clients on behalf of the
insurance company. So when the broker does that, they act as agents of both the insurance
company and the insurer. When they issue the cover note, they are binding the insurance
company and when the insurance company refuses giving such authority, the injured party can
argue ostensible authority-the insurer is giving the brokers access to their cover notes. In Mackie
v European Assurance Society (1869), the court held that because the agent was provided with
cover notes, the insurance company had conferred authority on the agent to bind.
Insurance Agent
An insurance agent is defined in Section 2 of the Act as ‘a person who, not being a salaried
employee of an insurer-(a) initiates insurance business; or (b) does any act in relation to the
receiving of proposals for insurance, the issue of temporary insurance cover-notes, or the
collection of premiums; On behalf of an insurer.’ Simply put, an insurance agent acts on behalf
of the insurance company. They may receive proposals, issue temporary cover notes and collect
premiums, among many other functions. Section 16 (Insurance agent’s license) provides that,
‘(1) A person shall not carry on business as an insurance agent in Zambia unless that person is
registered as such under this Act. (2) Except as provided by section 20, the Registrar shall issue
an insurance agent’s license to - (a) any individual who, in the opinion of the Registrar, is of
good repute and who satisfied the Registrar that he has suitable qualifications and experience to
perform the duties of an insurance agent; or (b) any company that, in the opinion of the Registrar,
is of good repute and which satisfies the Registrar that its managers and employees have suitable
qualifications and experience to enable the company to perform the duties of an insurance agent.’

The regulations for brokers are more stringent than the regulations for insurance agent. This may
be because brokers act for the common man, who is, typically, not very legally sophisticated, and
financially lean. The insurance agent, on the other hand acts for the more powerful and
financially muscular party-the insurer. So, the insurer should make sure that any person that they
engage as an agent, whether that person is an individual or company, must be duly licensed
under the Act. An offence is created under Section 23 of the Act if an insurer accepts insurance
business from an unlicensed person.
Conditions and Warranties
In insurance contracts, conditions and warranties are treated completely differently from the way
they are treated under general contract law. In the general law of contracts, conditions are more
significant in that a breach of a condition can entitle the innocent party to repudiate the contract
while a breach of warranty only is not as significant, as it only entitles the other party to damages.
But with regard to insurance law, it's actually the opposite: warranties are considered as the
fundamental terms of the contract, and their breach discharges the insurance company from
liability. Therefore, warranties must be strictly complied with, as it doesn't matter whether the
breach of the warranty is unrelated to the loss that occurs or not. However, if the insurance
company does any act that is inconsistent with avoiding the contract or does any act that is
consistent with upholding the contract, then they lose that right to avoid the contract. In West v
National Motor and Accident Insurance Union (1954) the insured was alleged to be in breach
of warranty as to the value of the property insured. The insurers, while relying on the terms of
the contract to enforce an arbitration clause in the contract, rejected the insured’s claim. The
court held that by relying on the term of the contract to enforce the arbitration clause, the insurers
had waived their right to avoid the contract, which was the only right they had.

Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd, The Good
Luck. (1991: the insured ship owner, in breach of warranty contained in the rules of the ship
owner’s mutual insurance club of which the insured was a member, took the ship to into a
prohibited area (the Persian Gulf at the time of the Iran –Iraqi conflict). The benefits of the
insurance had been assigned to a bank, which had lent money to the insured and was a mortgagee
of the ship. The insurers who had been notified of the assignment made an undertaking to advise
the bank promptly if the ship ceased to be insured. The insurer failed to advise the bank until
some weeks after it had discovered the breach of warranty and the loss of the ship. At this time
the bank decided to make a further advance to the insured, which it would never would have
made had the insured lived up to its undertaking to notify the bank promptly. Held by the House
of Lords, that the breach of warranty in a marine policy automatically discharged the insurer
from liability, in accordance with section 33 of the Marine Insurance Act 1906. the bank’s claim
for damages on the basis that the club had acted in breach of the undertaking, was upheld as the
insurance had automatically ceased.

Bond Air Services v Hill (1955): a condition in an aircraft insurance policy stated that the
insured was to observe the statutory regulations relating to air navigation. The aircraft crashed
and the insured claimed under the policy. But the insurers maintained that burden of proving that
he had complied with the conditions lay on the insured. It was held that this contention failed. It
was the duty of the insurers to prove that the assured had broken a condition if they wished to
avoid liability under the policy. Lord Goddard, C.J: ‘I cannot find that these cases have ever
been regarded, either in any judgment or in the opinion of eminent text writers, as throwing
doubt on what I think is axiomatic in insurance law, that, as it is always for an insurer to prove
an exception, so it is for him to prove the breach of a condition which would relive him from
liability in respect of particular loss.’

Unlike with warranties, a breach of a condition is only actionable if it causes loss. The insurer
can only seek to be discharged from contractual if the breach of a condition by the insured has
caused them loss. Conditions are typically about promises made about the claims procedure. The
claims procedure may be that the insured must report a loss or damage within 48 hours of that
loss or damage occurring. So, if the insured reports one week after the loss, the insured has
breached a condition but the insurance company is not allowed to avoid the contract, because
conditions are weak compared to warranties. The reason why insurance companies may attach
such a condition may be to grant them the opportunity of quickly investigating if there is
insurance fraud before evidence is tampered with.
Principle of Utmost Good Faith.
Because the insurer is not in a position to know the various activities or character of the business
or person you want to insure, they need you to not conceal any material information that may
affect their decision. The insurance company is fully dependent on your disclosure and it is only
fair that since any lie on your part may help you to defraud them, they should have the right to be
discharged from the contract if the insured lies or misrepresents essential facts. Breach of the
utmost good faith requirement entitles the insurer to avoid the contract. This is the fundamental
difference between ordinary contracts and insurance contracts. In ordinary contracts, you are not
under the obligation to draw the attention of the other party to anything that might influence their
judgment and making the contract with you; it's up to the other party to exercise their due
diligence. It's not just limited to misleading with fraudulent intent, even non-disclosure will
suffice to discharge the insurer. All the insurer has to show is that the insured withheld material
information. Material facts are facts which would affect the mind of a prudent insurer in deciding
whether or not to accept the insurance proposal and the premium thereof. The seminal case in
this regard is Carter v Boehm in which Lord Mansfield had the following to say: “Insurance is a
contract upon speculation. The special facts upon which the contingent chance is to be computed
lie most commonly in the knowledge of the insured only; the underwriter trust to his
representations, and proceeds upon confidence that he does not keep back any circumstances in
his knowledge to mislead the underwriter into a belief that the circumstance does not exist and to
induce him to estimate the risk as if it did not exist. The keeping back of such a circumstance is
a fraud, and therefore the policy is void. Although the suppression should happen through
mistake, without fraudulent intention, yet still the underwriter is deceived, and the policy is void;
because the risk run is really different from the risk understood and intended to be run at the time
of the agreement. Good faith forbids either party, by concealing what he privately knows to
draw the other into from his ignorance of that fact and his believing the contrary.”

Therefore, questions on the proposal should be answered as fully and as truthfully as possible,
because any misrepresentation on the proposal form will lead to a discharge of liability. the duty
to disclose is very wide; even if the questions on the proposal form don't ask you about a
material fact that you know about you still need to disclose it if it is relevant.
Mutuality of the Duty of Disclosure: insurance would equally be void against the underwriter if
he concealed material facts, for example, if he insured a ship on her voyage, which he privately
knows to be arrived an action would lie to recover the premium. The duty of good faith which
gives rise to the duty of disclosure is a reciprocal duty owed not only by the insured to the
insurer but also by the insurer to the insured. This position in itself did not appear to have any
real significance until the decision in Banque Financière de la Cité SA v Westgate Insurance
Co. Ltd. In that case the judge of first instance applied such a duty on an insurer and proceeded
to award damages for breach of that duty. Both the Court of Appeal and the House of Lords held
that the only remedy for breach was the usual one of avoidance of the contract. The duty to
disclose is only confined to facts actually known to the party on whom the duty falls.
There is no duty to disclose what in unknown. The onus of proving on the balance of
probabilities that there has been no disclosure of a material fact, is upon the insurer who allege it.
There is no doubt that the onus is a difficult one to discharge because it requires the proof of a
negative i.e. that insured did not disclose a material fact.

You don't have to disclose notorious facts-facts that are so obvious to any reasonable person.
You can answer questions on the proposal form truthfully but still be held in violation of this
doctrine. For example, the proposal asks you whether you smoke or not, and because you
stopped the day before, you say you don’t. Technically, you are being truthful but not truthful
enough; you need to reveal that you just stopped yesterday, because patently that has an impact
of influencing the decision of the insurer. This full disclosure must be made at the time that
contract of insurance is being made, not afterward misrepresentation or concealment of material
facts will entitle the insurer to avoid the contract, only if the same was given at the time the
proposal for insurance was made, not after the policy was made. However, this a matter of
contract, because your policy document may say that you must disclose even after the insurance
contract comes into being, that you must disclose any material facts that arise during the lifespan
of this insurance contract that affects your risk. For instance, if you take up smoking while the
health insurance contract is existing, your contract may actually require you to disclose, and if
you don't disclose that you've breached the principle of utmost good faith. But if your contract is
silent, then you are only held liable for misrepresentations you make at the time that the
insurance contract is being made. What is the effect of breaching this principle? In Zambia, the
party in detriment may elect to either repudiate or continue with the contract.
The doctrine of insurable interest
Insurable interest can be defined as the legal opportunity or interest a party has in the subject
matter of an insurance contract. If you don't have some kind of legal or monetary interest in what
it is that you're insuring, you cannot insure. It's a public policy consideration. It is there so as to
prevent people from benefitting from misfortunes and also not to encourage instances in which
people connive to destroy what they have insured, since they do not have any pecuniary interest
in them, so that they can benefit from the compensation. When you're thinking of whether
someone has an insurable interest, think about whether the person would suffer loss or not. If
they would, then, yes, they have an insurable interest. And if they would not, then they do not
have an insurable interest. Other people that are not owners may have insurable interest. For
instance, a bailee may have an insurable interest in the goods because if those goods are lost, the
bailee would suffer loss. So the bailee is allowed to insure. But sometimes it can get complicated.
For instance, if a tenant is renting a house, he or she is not the owner but he or she has a short
insurable interest in that house. You may say because he is just the tenant, he is not an owner.
The tenant can also say he or she has suffered a loss because of a number of reasons. The reasons
may be that because the apartment is only five minutes to the work place, the tenant is able to
work and save on fuel or bus fare. The other reason may be that the tenant would have to spend a
lot of time looking for another house. In the past, the court held a very strict approach, as was
shown in the Macaura case, but, now the Zambian courts have taken a more liberal stance.
Macaura v Northern Assurance Co., Ltd (1925): The appellant was owner of a timber estate.
He assigned the whole of the timber to a company called Irish Canadian Saw Mills Limited. The
appellant owned almost all the shares in that company. In the course of its operation the
company owed him a substantial amount of money. He insured the timber against fire but it was
gutted down by fire. He claimed on the policy. The insurance company repudiated liability on
grounds that the appellant had no insurable interest in the timber. it was held that this contention
succeeded, and that the action failed.
Lord Summer: this appeal relates to insurance on goods against loss by fire. It is clear that the
appellant had no insurable interest in the timber described. It was not his. It belonged to the Irish
Canadian Sawmill Co, Ltd., of Skibbereen, co. Cork. He had no lien or security over it, and,
though it lay on his land by his permission, he had no responsibility to its owner for its safety,
nor was it there under any contract that enabled him to hold it for his debt. He owned almost all
the shares in the company, and the company owed him a good deal of money, but, neither as
creditor nor as shareholder, could he insure the company’s assets. The debt was not exposed to
fire-nor were the shares, and the fact that he was virtually the company’s only creditor, while the
timber was its only creditor, while the timber was its only asset, seems to me to make no
difference. He stood in no “legal or equitable relation to” the timber at all. He had no “concern
in” the subject assured. His relation was to the company, not to its goods, and after the fire he
directly prejudiced by the paucity of the company’s assets, not by the fire.

Nyimba Investments Ltd v Nico Insurance Zambia Ltd (Appeal No. 30/2016): the court
changed the doctrine of insurable interest, looking at what they termed ‘where the wind was
blowing’ in other jurisdictions. They looked at how insurable interest has developed in other
jurisdictions, and they came to the conclusion that insurable interest is not just about ownership;
insurable interest is actually about the question of loss, the test accorded out is loss. Will this
person lose something if this property is destroyed? If the answer is yes, then it could be held,
not automatically though, that the person has an insurable interest in the thing being preserved.
The court requested courts, insurance companies and litigants to take a more pragmatic approach
by looking not strictly at ownership, legal and equitable, but at the question of loss. The facts
were that the parties that had ensured a filling station.
CONSTRUCTION OF INSURANCE POLICIES
Words that are used in a policy will be construed or understood in their ordinary or natural
meaning. This is the major rule.
Thompson v. Equity Fire Insurance Co. (1910): the shopkeeper took out a fire policy which
exempted the insurance company’s cover for loss that was caused while gas was stored in the
building. Now the shopkeeper had a small amount of gas for cooking. Fire broke out and caused
damage. The insurance company argued that the insured said there would be no gas in the
building, so they were not liable. The court held that the insurance company was liable because
the word ‘storing’ in the ordinary meaning imply a significant quantity of the content. A little bit
of cooking gasoline was held not to be sufficient for the purposes of ‘storing’ as used in the
policy
If a technical word is used, then the technical meaning of that word will be understood as it is
used in the construction of the policy, context-specifically. And then there is also the ‘whole
document approach’, in which the courts look at the whole contract in interpreting what that
contract means. So, in this case, the proposal form becomes part of the insurance contract and for
the purposes of interpretation, the proposal form is looked at as part of the whole.
LEGAL INSURANCE CONTRACTS
If the property insured is being used for any illegal purpose, for instance, prostitution, the court
shall not enforce the policy. Also, any insurance contract will be illegal if it is entered into to
achieve a purpose which is illegal or contrary to public policy. So, for instance, all the policies
that a purported insurance company that is actually not registered as a limited company in
dangers and brokerage business engages in are illegal. They are void for illegality.
THE PRINCIPLE OF INDEMNITY
Means that the insured is only able to recover the measure of their loss. So if the loss was worth
K10,000, the insured is only allowed to recover K10,000. It is about ensuring that the insured is
placed in the same position that they were before the risk materialized.
Castellain v Preston (1883): “The very foundation, in my opinion, of every rule which has been
applied to insurance law is this, namely, that the contract of insurance contained in a marine or
fire policy (and that equally applies to accident policy other than personal accident) is a contract
of indemnity and of indemnity only, and that this contract means that the insured, in case of a
loss against which the policy has been made, shall be fully indemnified, but shall never be more
than fully indemnified. This is the fundamental principle of insurance law and even a
proposition brought forward which is at variance with it, that is to say, which either will prevent
the insured from obtaining a full indemnity, or which will give the assured more than a full
indemnity, that proposition must certainly be wrong.”

Valued policies: there is an important exception to the principle of indemnity, these are called
valued policies. With valued policies, the insured and the insurer agrees the amount of
compensation that the insured will receive should any loss occur. It does not matter the value of
the loss that has been occasioned on the insured. This doctrine is underpinned by the doctrine of
freedom of contract. And it has to be noted that such agreements are perfectly lawful.
Zambia State Insurance Corporation v. Serious Farms Ltd (1987): the judge in this case
reiterated that insurance policies only covers the loss which was the subject matter of the
contract itself. And that any consequential loss cannot be claimed under the policy unless
expressly stipulated in the contract.
THE DOCTRINE OF SUBROGATION
This doctrine allows the insurer to reimburse the insured for their loss and then go after the
person that has occasioned the loss. This principle is convenient when, such as in our case, when
the insurer does not have the luxury of time to legally go after the offender themselves. So the
insured gives the insurer the right to go after the offender to recover only, and only, the
compensation that they have issued out to the insured. Should there be any surplus money
recovered from the offender, more money than the insurer gave the insured, the surplus should
be surrendered to the insurer. This has to be expressly provided for in the policy.
THE DOCTRINE OF CONTRIBUTION
This doctrine operates when the insured has taken more than one policy on one thing. Should any
loss occur, the insured is legally free to claim all the value for the loss from any of the insurance
companies and the chosen insurer would have to go and claim the money that the other insurance
companies would have paid to the insured.
THE DOCTRINE OF PROXIMATE CAUSE OR CAUSATION
Pawsey v Scottish Union & National Insurance: “Proximate cause means the active efficient
cause that sets in motion a train of events which brings about a result, without the intervention of
any force started or working actively from a new or independent source.” This simply means
that the proximate cause is the main or direct cause. In dealing with which was the main or direct
cause, the court takes the common sense approach. It has to be noted that proximate cause is the
dominant or direct cause and not the last cause. It also has to be noted that it is not the but for test
that is applied in determining which was the proximate cause.

Marsden v City and County Insurance (1865): a shopkeeper insured his plate-glass against loss
or damage arising from any cause except fire. In due course, fire broke out in the insured’s
neighbor’s property, prompting a mob to gather. The mob then rioted and in consequence, broke
the plate- glass. The court had no difficulty in holding that the riot and not the fire was the cause
of the loss and that therefore the insured could recover. The shift from the last cause to the
dominant cause as indicating the proximate cause was shown in the case of Leyland Shipping
Co. Ltd v. Norwich Union (1918) AC 350.

Leyland Shipping Co. Ltd. v Norwich Union (1918): an insured ship was torpedoed by an
enemy boat during the hostilities of first world war. She was taken out to a breakwater, where the
master hoped to continue to take off cargo but, buffeted by the heavy seas, she soon sank. The
ship owner contented that this was a loss by perils of sea (peril). The insurer argued that this loss
was a consequence of hostilities (exception). The House of Lords held that the proximate cause
was the torpedo and therefore that the claim failed. Loss by explosion and incoming seawater
was the inevitable consequence of the torpedo.

If there is a single cause, and that single cause is an insured peril, then the proximate cause of
the loss is an insured peril and there is a valid claim under the policy. The difficulty, however,
lies in determining the proximate cause where there are concurrent and interdependent cause.

Where there are several concurrent causes and no excepted perils are involved, provided one
of the causes is an insured peril, the loss is recoverable. If, however, there are excepted perils
involved and it is not possible to separate the damage caused by the insured peril from that
caused by the excepted peril, then the insurers are not liable. Where it is possible to separate the
causes, insurer will be liable for that part of the loss caused by the insured peril but not for that
part caused by the excepted peril.

Wayne Tank & Pump Ltd v Employers’ Liability Assurance (1974): new equipment was
installed by Wayne Tank under contract for Harbutt’s Plastcine. It was switched on to warm up
overnight prior to trial run and was left unattended, so that nobody noticed that the piping part of
the equipment was wholly unsuitable for the use to which it was put. It melted and ignited. But
for that kind of piping (exception cause No.1) there would have been no fire. But for the absence
of proper supervision overnight (peril cause No.2) the fire would have not occurred as the
melting would have been observed in time to prevent the fire. Wayne Tank was insured by the
defendants under a public liability policy which excluded liability arising from damage caused
by the nature or condition of any goods supplied by the insured. There were two concurrent
causes, one covered the other excepted. The two causes were dependent in that one did not lead
to the other but also interdependent in that neither would have led to the fire but for the other.
The Court of Appeal unanimously held that the cause of the loss was the defective nature of the
equipment. This decision clearly accorded with authority such as the Leyland Shipping case,
whereby the original cause predominates unless it can be established that it merely facilitated the
subsequent cause which totally changes the situation to bring about the loss.

Lawrence v Accidental Insurance Co. Ltd (1881): the deceased had taken out an insurance
policy that covered death in case of personal injury caused by accidental means but not death
from injury caused by fits. While standing on a platform at a train station had a fit, fell under a
passing train and was killed. The court held that the proximate cause was the impact of the train
(peril) and not the fit (exception). The court’s reasoning was simply that if a man has a fit on a
station platform, it is likely that he will fall under a train. If he does fall under the train, injury is
probable and death is not unlikely.

Concurrent and Independent causes: where there are two or more concurrent and proximate
causes- one a peril and the other an exception, and these two are independent in the sense that
each one would have caused the loss without the other, the insured may recover only that part of
the entire loss attributable to peril. However, where it is not possible to separate the damage
caused by the insured peril from that caused by the excepted peril the insurer is not liable.

INSURANCE PREMIUMS AND GENDER

Charging different premiums exclusively based on somebody's gender.