Liability insurance — holders can sleep easier

Confirmation from the CA today in Zurich Insurance Plc v Maccaferri Ltd [2016] EWCA Civ 1302 that insurers can’t expect second sight from their policyholders without the clearest words. Maccaferri, suppliers of outsize staple guns for use on wire fencing, hired one to Jewson, who hired it to construction company Drayton. Maccaferri were insured against product liability by Zurich, under a policy requiring the insured to “give notice in writing to the Insurer as soon as possible after the occurrence of any event likely to give rise to a claim with full particulars thereof”. On 22/9/2011 an employee of Drayton, in an incident whose details were not entirely clear, suffered an eye injury from the gun; Maccaferri was told a few days later. In March 2013 the employee sued Drayton, alleging that there had been something wrong with the gun; on 22/7/2013 Maccaferri were told that they had been joined as third parties, and promptly notified Zurich. In the event Maccaferri settled the proceedings against them for something over £200,000. Zurich refused to pay, on the basis of late notification. Maccaferri retorted that although they had known of the accident in September 2011 there had until 2013 been no indication of any potential liability. Question: was the duty to notify triggered by knowledge of the accident, or by knowledge of the accident plus its propensity to spawn a claim? Agreeing with Knowles J, the CA plumped for the latter. And, in our view, quite rightly so. Do we really want notifications being given to underwriters of every piddling accident, just in case, in order to avoid the risk of argument later? Probably not. Nor, one suspects, do sensible insurance companies really want it either.